Energy charges crippling key net zero solution providers and slowing the UK’s economic recovery

Commenting on National Grid’s announcement of an increase to the Revenue Recovery Charge (RRC) Andrew Large Chair of the Energy Intensive Users Group said:

EIUG has grave concerns that the fundamental assumptions driving Ofgem’s decision to implement the new Gas Transmission Charging Regime have proved totally flawed and are putting at risk industries who are fundamental to the green industrial revolution, delivering our Net Zero and Hydrogen Economy.

Ofgem’s recent Amendments to Gas Transmission Charging Regime for 1st October 2020 implementation has changed the nature of the charging structure and removed the Shorthaul/NTS Optional Commodity Charge. This was despite industry concerns at the time on the potential impact on consumer costs including the disproportionately high cost imposed on large consumers and electricity generators. Ofgem themselves identified flaws within the regime, including examples where network charges were in excess of the costs of building new private pipelines to directly bypass the grid.

After just 2 months of the new charging structure, National Grid Gas has now advised of a further significant increase to the October charges. This heaps a further 10’s of millions of financial pressure on UK industry at a time when many are already struggling with the effects of the Covid-19 pandemic, preparing for Brexit uncertainty, new international trading arrangements and an as yet undefined carbon regime.

The EIUG and its members are gravely concerned that the cumulative impact is likely to see some sites and industries supporting well paid jobs, again reconsider their economic viability, in parts of the country where they are most needed. We are calling on National Grid, Government & Ofgem to review and fix the underlying issue with the gas transportation charging regime and replace the gas shorthaul tariff. We also ask that Ofgem report on the original assumptions and impact assessments that drove their decisions.

Without swift action and assurance, there is a real danger that the UK’s disproportionately high network costs, and punitive network charging regime will continue to de-industrialise the UK and offshore production of the essential foundation products that our society depends on most.

ENDS

NOTES

EIUG Contact: Nigel Bradbury, Director Energy Intensive Users Group – 07951 387408

About the Energy Intensive Users Group:

The Energy Intensive Users Group (EIUG) represents the UK’s energy intensive industries (EII?s) including manufacturers of steel, chemicals, fertilisers, paper, glass, cement, lime, ceramics and industrial gases.

Our members produce materials which are essential inputs to UK manufacturing supply chains. This includes materials which support climate solutions in the energy, transport, agriculture and household sectors. They make an annual contribution of 15bn to UK GDP, supporting 200,000 jobs directly and 800,000 jobs indirectly.

However, as foundation industries, they are both energy and trade intensive. If they are to compete in the global markets in which they operate and remain located and investing in the UK, they need access to secure, internationally competitive energy supplies and freedom to export without tariff barriers.