British industry will be "damaged irreparably" unless the imbalance between energy markets in the UK and continental Europe is addressed over the next decade, a senior chemical industry executive warned yesterday.
In written evidence to the House of Commons business and enterprise committee, Christopher Tane, chief executive of the chemical company Ineos ChlorVinyls, said: "UK gas and electricity prices are significantly higher than other major European markets."
Tane told the cross-party committee of MPs that for companies with plants across Europe, and where energy costs were a key issue, higher power prices counted against the UK when it came to making investment decisions. UK companies have long complained that the energy market works against British firms, though the European commission has been pushing for greater liberalisation of markets in continental Europe. Many British firms would like power contracts with suppliers on the mainland but this has proved difficult.
Tane said: "It is perfectly clear that liberalised continental markets will not happen over the next 10 years. It is clear that British industry, unless something significant changes during that 10-year period, will be damaged irreparably. Once assets close down, they do not come back to the UK." Asked what he thought needed to happen, Tane said: "The starting point is that the government, BERR [the Department for Business, Enterprise & Regulatory Reform] and Ofgem recognise there is a problem that needs solving rather than telling us it will be all right on the night."
He pointed out that during the last gas supply crisis two years ago some 100,000 manufacturing jobs had been lost. "This is an issue that will keep reoccurring unless something happens."
Tane said his company was one of the largest gas and electricity users in the UK and had experience of the difference between the UK and continental European energy market because it had plants in both areas.
The chief executive said Ineos ChlorVinyls had tried to use its geographic reach to buy energy from continental European suppliers. "Of the 19 we approached, we got six replies. All six replies were based on the UK pricing structure, not on the continental structure.
"I would like to have a choice. I'm competing with French, German and Belgium producers. I don't need to know what the price of gas is, as long as it is the same. At the moment it is the same or worse, and it is more volatile than theirs." He was also critical of the way the UK market operated. "We are a large consumer of gas and the UK's biggest single-point electricity user. No one is competing to get my business. With one exception, I have never had an approach from a gas and electricity supplier to get my business."
Jeremy Nicholson, director of the Energy Intensive Users Group, said Brussels was trying to push through greater liberalisation. "The problem is not so much with the commission. We have a number of member states ... that have no intention of fully liberalising their gas markets."
Source: The Guardian|by Mark Milner
In written evidence to the House of Commons business and enterprise committee, Christopher Tane, chief executive of the chemical company Ineos ChlorVinyls, said: "UK gas and electricity prices are significantly higher than other major European markets."
Tane told the cross-party committee of MPs that for companies with plants across Europe, and where energy costs were a key issue, higher power prices counted against the UK when it came to making investment decisions. UK companies have long complained that the energy market works against British firms, though the European commission has been pushing for greater liberalisation of markets in continental Europe. Many British firms would like power contracts with suppliers on the mainland but this has proved difficult.
Tane said: "It is perfectly clear that liberalised continental markets will not happen over the next 10 years. It is clear that British industry, unless something significant changes during that 10-year period, will be damaged irreparably. Once assets close down, they do not come back to the UK." Asked what he thought needed to happen, Tane said: "The starting point is that the government, BERR [the Department for Business, Enterprise & Regulatory Reform] and Ofgem recognise there is a problem that needs solving rather than telling us it will be all right on the night."
He pointed out that during the last gas supply crisis two years ago some 100,000 manufacturing jobs had been lost. "This is an issue that will keep reoccurring unless something happens."
Tane said his company was one of the largest gas and electricity users in the UK and had experience of the difference between the UK and continental European energy market because it had plants in both areas.
The chief executive said Ineos ChlorVinyls had tried to use its geographic reach to buy energy from continental European suppliers. "Of the 19 we approached, we got six replies. All six replies were based on the UK pricing structure, not on the continental structure.
"I would like to have a choice. I'm competing with French, German and Belgium producers. I don't need to know what the price of gas is, as long as it is the same. At the moment it is the same or worse, and it is more volatile than theirs." He was also critical of the way the UK market operated. "We are a large consumer of gas and the UK's biggest single-point electricity user. No one is competing to get my business. With one exception, I have never had an approach from a gas and electricity supplier to get my business."
Jeremy Nicholson, director of the Energy Intensive Users Group, said Brussels was trying to push through greater liberalisation. "The problem is not so much with the commission. We have a number of member states ... that have no intention of fully liberalising their gas markets."
Source: The Guardian|by Mark Milner
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