Five major Teesside industrial companies have written to the UK minister for Business, Energy and Clean Growth warning they may be forced to bypass the national gas transmission system unless amendments are made to “crippling” new charges set to be introduced by Ofgem.
The firms – global leader Huntsman Polyurethanes, leading UK fertiliser manufacturer CF Fertilisers, international gases group BOC, global acrylics leader Lucite International and integrated energy provider Sembcorp Energy UK – have told Kwasi Kwarteng the changes will cause “serious damage to key UK manufacturers”.
All significant employers in the Tees region, where much of Britain’s gas from the North Sea comes ashore, they use only a tiny fraction of the national network and have enjoyed shorthaul exemptions for the past 20 years.
They are predicting that the new charges for transmission will cost them a combined total of £30m a year, money they say could be spent on improving the efficiency of their own assets.
Philip Aldridge, chief executive of NEPIC, the industry body representing the vital chemical-processing sector in the North-East, led the firms’ appeal to government.
Philip said: “The new charging structure is absolutely crippling to some of the biggest employers in the UK’s leading manufacturing area and risks serious damage to the competitiveness of their businesses and operations, as well as the future of people employed in the hundreds of firms that supply them.”
NEPIC argues that Ofgem did not carry out impact assessments on the industries directly affected by the charging changes – and states that the regulator’s “inaction” to stand by its commitment to industry to make swift decisions that would afford the affected companies the time needed to look at mitigation options as “unacceptable”.
The letter to Mr Kwarteng states: “As a significant chemical producing region, we ask that you make urgent representations to Ofgem on the introduction of a replacement for short haul to keep affected energy intensive industries on Teesside, and in the UK, on the national gas grid.
“As a significant chemical producing region, we ask that you make urgent representations to Ofgem on its timescales for introducing a tariff that retains energy intensive industries on Teesside and in the UK, on the national gas grid.”