Price of natural gas to rise again

jaggeh

Irish Gas Prices to Rise due to International Wholesale Gas Costs

On foot of the publication of the draft decision paper and the consultation process initiated by the Commission for Energy Regulation (CER) today (Friday 21 July, 2006), Bord Gáis has confirmed that the price of natural gas to residential and small commercial and industrial users is likely to rise by almost 34% on 1st October, 2006. The price increase will mean a rise of 84c per day for the average residential customer.

Commenting, David Bunworth, Head of Bord Gáis Energy Supply said: “Due to the unprecedented increases in the price of wholesale natural gas in recent years, and the expiration of a number of long-term legacy gas contracts which shielded Bord Gáis customers from rising gas prices in the past, we were compelled to apply to the CER for approval to increase the retail price of natural gas. The fact that an increase is necessary is hugely regrettable and we understand that this is not news our customers want to hear, however, the situation is completely unavoidable – it is driven by global market conditions outside of our control, and the control of all gas suppliers.”

Continuing he said: “We have worked extremely hard to minimise the impact of increased costs to our customers, however, the reality we have to deal with is that the cost to Bord Gáis of purchasing natural gas has risen by €150 million in the past year. Despite the global market being outside of our control, it has always been and will continue to be a core objective of Bord Gáis to provide the best quality of service to our customers at the best market prices available.”

The steep rise in wholesale gas and oil prices over the past number of years has seen similar price increases for gas users across Europe. If the proposed price increase is introduced in October, Ireland will still come below the EU average and will be the 9th cheapest country with a typical annual residential gas bill of €1,200.

Concluding, David Bunworth commenting on the likelihood of further gas price increases said: “Natural gas will remain a highly competitive fuel and a fundamental element of the Irish energy mix. Two of the main factors which influence international gas prices are the cost of crude oil and the existence of natural gas infrastructure. Although no one can predict for sure, the general expectation is that wholesale gas prices will start to stabilise from next year, as new gas infrastructure into the UK market comes on stream. Our customers will benefit from any price stabilisation as price reductions as well as increases are passed onto our customers.”

ENDS

Note:
The CER’s Proposed Decision on Bord Gáis Energy Supply Revenue for Domestic and small Commercial and Industrial Customers for the period of 1 October 2006 to 30 September 2007 is now available on www.cer.ie

Just got wind of it yesterday, dont think it has hit the papers yet.

Sarsfield

It was all over the news yesterday.

But what can you do? The price of fossil fuels is gone through the roof with little prospect of things ever returing to the old days.

Oil & gas will never be cheap again.