The body that purchases energy for most Government departments has strongly criticised a recent rise in gas charges approved by the energy regulator. Emmet Oliver reports.
The Office of Public Works (OPW), which purchases electricity and gas on behalf of several departments and State agencies, sent a letter last month to the Commission for Energy Regulation (CER) complaining about the rise in gas transportation charges.
These charges make up about one-third of the unit price of gas overall.
Last week business groups and opposition TDs strongly criticised the decision to increase gas prices to domestic customers by just over 25 per cent. However, this is the first time any Government agency or department has raised public concerns over the pricing of gas.
The letter sent by the Government supplies agency, based at the OPW, claims that Bord Gáis as a monopoly operator in the gas transportation area "is immune from the economic conditions prevailing in the marketplace and the end user has to accept it".
Recently the CER approved an 18.6 per cent increase in the charge for gas transported into Ireland via Scotland and a 16.6 per cent rise for gas transported via Inch, near the Kinsale field.
This decision appears to have found little favour with the OPW's procurement department. "This approach to cost recovery will produce a short-term advantage for Bord Gáis while producing long-term instability in the market for natural gas, which is not in the interests of Bord Gáis or the consumer," states the letter sent on August 25th.
The letter does not deal with the recently approved increase in tariffs to consumers of more than 25 per cent, although any increase in transportation charges will have an impact on the overall price of gas.
The letter from the OPW acknowledges that the CER cannot control the price of gas on the international markets, but it says this is precisely why the cost of transportation must be better controlled.
"It is problematic enough where the energy cost fluctuates due to market influences outside the control of anyone in Ireland, but this problem is exacerbated where the fixed cost element of the price of natural gas, ie transmission and distribution capacity, oscillates significantly from year to year," the letter adds.
The letter also points out that forecasts for the future price of a therm of gas are available for five years ahead, but at this point customers are not even aware what the transportation charge might be from October 2006 onward.
Last night the CER rejected the arguments put forward by the OPW, although a spokesman said the CER welcomed any feedback from gas customers on the issue of transportation and distribution charges.
The CER recently told the energy sector that there was little point in deferring the rising cost of gas transportation, because it would have to be recovered at some point.
It also said some of the increase (about €15 million) in gas transportation was being deferred. It also pointed out that demand for transporting gas had fallen recently and consequently the unit price for using the system needed to increase.
