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Gas firms oppose charge for pipelines

Barry O Halloran - Irish Times

THE BACKERS of a proposed €600 million energy project are considering High Court action against the energy regulator in a row over proposed charges for using the Republic’s natural gas network.

The Commission for Energy Regulation (CER) has decided that all natural gas suppliers operating in the Republic should pay for two pipelines connecting Ireland and Britain, irrespective of whether or not they use them.

The decision applies from 2014 and means operators such as Shell, which will be bringing in gas from the Corrib Field, and Shannon LNG, which is developing a liquid natural gas plant in north Kerry, will have to pay a charge for the interconnectors, even though they will not use them.

Industry sources say that US-backed Shannon LNG, which plans to invest €600 million in its project, is considering going to the High Court to have the regulator’s proposal overturned.

The company, owned by US multinational Hess, has lodged complaints against the regulator with the EU’s energy and competition law directorates.

Shannon LNG managing director Paddy Power said yesterday the company was reviewing the detail of the regulator’s latest decision. The company plans to import liquified natural gas by sea and convert it back to gas at a plant on the Shannon estuary, from where it would sold via the natural gas network.

State company Bord Gáis has built the two pipelines at the Government’s request. It supports the principle that all operators should contribute to the cost of maintaining them. Over 90 per cent of the gas used in Ireland is imported via the pipes and they are considered vital to energy security.

Even though the amount imported will fall when Shannon and Corrib come on stream, gas will still be imported over the interconnectors, so the cost of maintaining them will have to be met.

Bord Gáis has argued that allowing operators such as Shannon LNG to opt out would lead to them making super-normal profits at the expense of business and consumers.

The CER is proposing a system that will favour the most efficient entry point for gas. It intends consulting on the charge with all parties, including Shannon LNG, in the autumn. Shell Exploration and Production Ireland, operator of the Corrib Field, has told the regulator any solution should avoid discrimination and cross-subsidisation, and comply with EU law.

Posted Date: 
3 July 2012