Industry NewsThe Competition Commission (CC) has provisionally rejected a request from Centrica to free it from restrictions on the use of the Rough storage site. Centrica's position in the gas market and the size of the Rough facility means the rules have to remain in place, according to the CC. However, it was suggested that there may be modifications in the rules following a consultation. As such, the final ruling on the issue could be a little different.
Centrica was obliged to adopt rules regarding the operation of the Rough facility when it bought it from Dynergy in 2002. The restrictions were imposed due to concerns that there was a potential impact on competition and market prices given the position held by Centrica in the supply chain. Following the development of other storage sites around the UK, and the increasing use of LNG, Centrica had called for a review of the rules in the early part of 2010. Centrica argued that it no longer held a position in the market that meant its operation of Rough would detrimentally impact the market. The energy group also argued that the restrictions were contrary to the regulations in the European Union's Third Energy Package.
The CC has not agreed with this position. On the issue, Deputy Chairman of the CC and member of the Centrica Review group, Roger Witcomb, said, "Although its share has fallen, Centrica remains by far the largest domestic gas supplier in the UK. Equally, whilst there has been a significant increase in the available capacity for importing gas to Great Britain we found that we needed to take into account other factors that may determine the amount and cost of the gas delivered from abroad. Our provisional view is that the market changes were not sufficient to warrant the release of the Undertakings. While market conditions have changed, Centrica's ownership of Rough would still give it significant market power, which it could in particular use to discriminate in giving access to capacity at Rough, to the disadvantage of its competitors in retail gas supply".
As such, the operational rules will remain in place for the time being. This means that Centrica will continue to ensure non-discriminatory access to all users of the site, as well as transparency regarding operational data. Moreover, Centrica will also be required to separate the management of Rough from the rest of the Centrica group.
Commenting to press, a Centrica spokesperson responded, "We are carefully considering the detailed report and will engage further with he Commission prior to its final decision".