OFREG Comment on Responses to Gas Consultation

Ofreg’s regulation of the Northern Irish gas markets: principles and priorities.

Ofreg published a paper on 25 July 06 entitled “Ofreg’s regulation of the Northern Irish gas markets: principles and priorities”, setting out five major workstreams to be prioritised by Ofreg in 2006/07 in the discharge of its statutory duties relating to gas. Ofreg sought views from the industry and consumers, regarding the principles and priorities outlined.

Overall, Ofreg received a very positive response from both industry and consumers, who were in agreement with both the principles and priorities outlined. Respondents also acknowledged the progress, made to date, by both Ofreg and the industry in the successful development of the gas industry in NI, and welcomed the opportunity for continuing contribution to meeting future challenges. With regard to the specific work areas please see below.

1. Putting Phoenix Natural Gas’ licence on a sounder (longer-term) financial footing which will ensure stable long term prices for gas distribution.

There were no objections to the Ofreg proposals for achieving this, and all parties welcomed an agreement which would promote stable gas prices and benefit consumers and the industry as a whole. This timetable of work is currently progressing as planned, and a public consultation on progress to date is due to be published later in October.

2. Bolstering consumer confidence in gas as a fuel by promoting competitive choice of supplier.

Concern was raised that this issue would not receive the attention it warranted in providing benefits to consumers in terms of price and choice. However, Ofreg are now in the position to allocate additional resources to the Gas Market Opening Group (GMOG) and it will be reprioritised in 2006 and ongoing into 2007, in order to facilitate effective competition in the NI supply market.

3. Encouraging the development of the network outside Belfast.

No objections were received to the Ofreg proposal to complete the first firmus price control in 2006, and then to prioritise other issues in the longer term. This workstream will bring the social, economic and environmental benefits of natural gas to more people in Northern Ireland, and will continue as planned.

4. Bolstering consumer and investor confidence in the regulation of gas by modernising relevant licences.

Support was raised for continuing progress on licence modifications related to the EU Directive and also a wider licence review in 2006/07. The implementation of the EU Directive will foster further stakeholder confidence in the industry going forward. This workstream will continue as planned with all licencees being consulted on any proposed modifications.

5. Reducing the cost-base of Northern Ireland’s transmission arrangements.

Strong support was voiced for Ofreg’s continuing progress on streamlining the operation of the transmission network, EU Regional markets, and the All-Island development framework. These workstreams will continue as planned. With regard to a timetable for future implementation of the All Island Gas Market, Ofreg hope to be in a position to advise further on this matter later next year once resources have been assessed.

As stated in the original paper, the issues highlighted above represent only the major work areas put out for consultation, and alongside these many other workstreams in the gas division are continuing to make progress.

In terms of future work plans beyond this immediate timeframe, NIAER, under a statutory duty, will be publishing a Forward Work Programme for the financial year 2007/08. During drafting, all stakeholders will be consulted and have the opportunity to make representations or objections to proposals.

Any further queries should be addressed to Emma Magill (emma.magill@ofregni.gov.uk)

Notes for Editors

OFREG (the Office for the Regulation of Electricity and Gas) is the operating name of the Northern Ireland Authority for Energy Regulation (NIAER) the regulator of the Electricity and Gas industries in Northern Ireland. NIAER’s powers are derived from the Electricity (Northern Ireland) Order 1992, the Gas (Northern Ireland) Order 1996 both as amended by the Energy (Northern Ireland) Order 2003.

The Department of Enterprise, Trade and Investment appointed Mr Peter Matthews as Chairman of the Authority on 1 April 2006. Mr Iain Osborne became the new Chief Executive of Ofreg on 15 June 2006.

For further information contact Conall McDevitt, Weber Shandwick Tel: 028 90764911, 07770 886933