Gas-guzzling firms ask for cut-off compensation
Guardian Unlimited Politics | Special Reports | Gas-guzzling firms ask for cut-off compensation
Oliver Morgan
Sunday December 18, 2005
The Observer
Major industrial gas users will write to the Prime Minister and the trade and industry secretary, Alan Johnson, this week demanding compensation if their gas supplies are cut off this winter.
The Energy Intensive Users Group (EIUG), representing industries such as chemical, steel, paper and glass producers which use high levels of gas in manufacturing processes, will argue that companies having supplies cut in emergency circumstances should be compensated for loss of earnings.
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The EIUG argues that industrial users who have their supplies halted are, in effect, providing a socially beneficial service in helping maintain supply to domestic customers, and for this they should be remunerated.
The prospect of cuts has risen this year due to supply bottlenecks and the forecast of a cold winter, which will drive up demand. Prices rose to record levels during the cold snap at the end of last month, and have fallen back since then. They remain, however, at twice last year's levels.
The EIUG is limiting its claims to companies which have non-interruptible contracts. Some, such as chemicals producers Ineos Chlor and Terra Nitrogen, have interruptible contracts under which they pay lower rates for gas in return for risking a supply cut when gas is scarce. These companies have already experienced cuts to supply during the cold snap.
Jeremy Nicholson of the EIUG said: 'There is a cross-subsidy where large users are providing a level of security for the domestic sector which is not compensated for under current agreements. We would like to see compensation for interruption or the risk of interruption.'
He said the means of compensation could come through supply charges on energy bills, but that details had yet to be finalised.
Oliver Morgan
Sunday December 18, 2005
The Observer
Major industrial gas users will write to the Prime Minister and the trade and industry secretary, Alan Johnson, this week demanding compensation if their gas supplies are cut off this winter.
The Energy Intensive Users Group (EIUG), representing industries such as chemical, steel, paper and glass producers which use high levels of gas in manufacturing processes, will argue that companies having supplies cut in emergency circumstances should be compensated for loss of earnings.
Article continues
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The EIUG argues that industrial users who have their supplies halted are, in effect, providing a socially beneficial service in helping maintain supply to domestic customers, and for this they should be remunerated.
The prospect of cuts has risen this year due to supply bottlenecks and the forecast of a cold winter, which will drive up demand. Prices rose to record levels during the cold snap at the end of last month, and have fallen back since then. They remain, however, at twice last year's levels.
The EIUG is limiting its claims to companies which have non-interruptible contracts. Some, such as chemicals producers Ineos Chlor and Terra Nitrogen, have interruptible contracts under which they pay lower rates for gas in return for risking a supply cut when gas is scarce. These companies have already experienced cuts to supply during the cold snap.
Jeremy Nicholson of the EIUG said: 'There is a cross-subsidy where large users are providing a level of security for the domestic sector which is not compensated for under current agreements. We would like to see compensation for interruption or the risk of interruption.'
He said the means of compensation could come through supply charges on energy bills, but that details had yet to be finalised.
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