European power giants to blame for our sky-high bills: They buy the gas and sell it BACK at extortionate prices

13 April 2012

Energy prices are rising faster in Britain than almost anywhere in Western Europe because foreign suppliers are rationing our own gas.

As major users told MPs that European power monopolies were effectively holding Britain to ransom, the extent of the UK's suffering was spelled out by the respected Organisation for Economic Co-operation and Development.

It said UK energy prices have jumped 13.6 per cent in the past year, adding hundreds of pounds to domestic bills. This compares with 9.5 per cent in Germany, 12 per cent in France and just 2.8 per cent in the Netherlands.

Energy prices are rising faster in Britain than almost anywhere in Western Europe because foreign suppliers are rationing our own gas

Energy prices are rising faster in Britain than almost anywhere in Western Europe because foreign suppliers are rationing our own gas

And there are warnings that UK household bills could rise by a further 25 per cent this autumn.

The problem stems from the fact the country is no longer self-sufficient in gas from the North Sea and has become reliant on imports during the winter.

Foreign power firms are buying cheap North Sea gas from Britain in the summer and putting it into vast storage facilities on the Continent.

They then refuse to pipe it back to the UK when it is needed in the winter, effectively rationing supplies and pushing up prices.

The UK is vulnerable to these strong-arm tactics because we have such tiny gas holding facilities that we cannot store cheap North Sea gas in the summer for use in the winter.

There is enough storage to supply the country with gas for only 13 days, compared with 99 days in Germany and 122 in France.

Yesterday large-scale gas users warned the Commons Business and Enterprise Select Committee, which is investigating the reasons behind the price rises, that Britain's energy needs were at the mercy of foreign suppliers.

Jeremy Nicholson of the Energy Intensive Users Group told the MPs that foreign energy companies are failing to sell gas to the UK when we need it.

"That leaves us very vulnerable," he said.

UK wholesale prices for gas to be supplied a year ahead is 16 per cent higher than in Europe, while the figure for electricity is 20 per cent more.

Some manufacturers face a 100 per cent rise in energy bills when their annual contracts come up for renewal in autumn.

This could drive many to the wall, bringing up to 100,000 job losses.

Chris Tane of the Chemical Industries Association, and chief executive of chemical and plastics company INEOS Chlor, said his company was blocked from buying gas in Europe.

The company has plants on the continent and in the UK.

Mr Tane said: "Last year, my company went into Europe and talked to 19 suppliers, many of whom supply our sites on the Continent. We asked them to give us gas on the same basis and we would transport it to the UK.

"But of the 19 approached we got six replies. They adamantly refused to give us prices based on Continental contracts."

The MPs signalled that they plan to ask ministers and the industry regulator Ofgem why they have failed to ensure more storage was built.

It has been clear for 20 years that North Sea supplies were dwindling and that the country would rely more on gas held in storage and imports during peak demand in the winter.

The industry groups want the European Commission to break up the monopoly control of Continental power supply by a few foreign giants.

They say that unless urgent action is taken, Britain could remain vulnerable to gas rationing and higher prices for at least another ten years.

The firms in the firing line are RWE of Germany, which owns nPower in the UK, E.on of Germany, which has a UK subsidiary, and EDF of France, which also operates in the UK.

These firms not only own vast quantities of gas in storage, but also control pipelines that could bring supplies from Russia to the UK.

This stranglehold gives them enormous power over supplies and prices.

The industry bodies told MPs their problems are compounded by the fact the "big six" power companies within the UK - British Gas, E.on, Npower, EDF, Scottish & Southern Energy and Scottish Power - are failing to compete.

The official consumer body Energywatch has called for a Competition Commission inquiry, saying the big six do not fight for customers based on price or service.

The net result is that there is a price gap of just £30 a year between the cheapest and most expensive firm based on a dual fuel contract for householders.


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