Tuesday, 19 February 2013

Questions (474)

Michael Creed


474. Deputy Michael Creed asked the Minister for Communications, Energy and Natural Resources if his attention has been drawn to a request by Bord Gáis Networks to the Commission for Energy Regulation for an increase in tariffs; his plans to resist such a proposal bearing in mind the fragile nature of the domestic and non-domestic market; and if he will make a statement on the matter. [8731/13]

View answer

Written answers (Question to Communications)

Responsibility for the regulation of the gas market, including the setting of certain gas tariffs, is a matter for the Commission for Energy Regulation (CER) which is an independent statutory body. Network costs are reviewed every five years and used to establish maximum allowed revenues for BGÉ's transmission and distribution activities for a given year of the five-year period. The allowed revenues are used to determine the network tariff for each year. In August 2012, the CER published a Decision Paper on gas transmission revenue and tariffs for the period October 2012 to September 2013. This Decision has resulted in increases in the transmission tariff paid by shippers. These increases were based on the forecast bookings for capacity submitted in April 2012 by Bord Gáis Networks (BGN), based on demand estimates. Since then there has been a persistent decline in primary capacity bookings on the gas transmission system. This, in turn, puts further upward pressure on unit tariffs required to remunerate investments in the system. In November 2012, the CER published its decision on the 5 Year Gas Networks Tariff Review (PC3) which set the revenues BGN is allowed over the period. The decision took account of the emerging significant reductions in forecast primary bookings supplied by BGN. These forecasts indicated a fall of approximately 18% in bookings from BGN’s original forecast for the five year period of the review.

The CER is currently undertaking an interim review of BGN Allowed Revenues and gas transmission tariffs for 2012/2013, as determined in the August 2012 decision. A consultation is currently under way and will close on 22 February. The review involves detailed assessment of BGN’s own recent proposals, followed by a consultation on the CER’s proposed decision which envisages a 13.2% increase in the transmission tariff with effect from April 2013. While some increase in the transmission tariff charged by BGN to shippers with effect from April 2013 may be unavoidable, it is not anticipated at this stage that there will be an increase in the regulated retail tariff to end customers from April. The CER will also be consulting on a number of other means of addressing the decline in the primary bookings on the transmission system which has persisted and indeed grown in recent times.