Monday 22 May 2000

Gas and Electricity Supply Industry Group Calls for Early Lifting of Ban on Gas-Fired Power Stations

The Government must act now to remove uncertainty and restore confidence across the energy supply industry in the run-up to the lifting of its ban on new gas-fired power station development, according to a new report published (22 May) by the Pan Industry Group against Stricter Consents.

The group, which represents gas producers, power generators, contractors and suppliers, is urgently pressing for a speedy return to a free and transparent market. It argues that the lifting of the stricter consents policy will end a major distortion in electricity generation and stimulate new investment and employment opportunities in gas and electricity businesses throughout the UK.

In its report, The Role of Gas-Fired Generation in a Free and Open Energy Market, the pan-industry group estimates that in the last two and a half years more than £3 billion of investment in new power plant and gas field development has been lost or deferred as a direct result of the policy, at a cost of some 36,000 jobs.

The Government has indicated that the introduction of the new electricity trading arrangements (NETA) would allow it to remove the policy.

Peter Youngs, chairman of the pan-industry group and managing director of CalEnergy Gas (UK) Limited, said: The group welcomes the Secretary of States recent statement that NETA will be implemented in the autumn. We now urge Government to set a clear date, as early as possible in October, for an end to this damaging policy. Given the time-scales required to bring new gas and power developments on stream, its early removal would assist a swift transition back to a fully competitive market.

The Group also seeks acknowledgment from Government that decisions on the best type of power plant for any given location should be left to the market, and that the planning process will not be used as a further constraint on new gas-fired developments.

 

Recommendations set out in the report are:

* To set a clear date as early as possible in October 2000 for the lifting of the ban;

* To determine the criteria for the granting of consents for all new power generation projects, so that applications and re-applications can be processed quickly and without discrimination;

* To clarify the procedure and energy policy considerations in the granting of Section 14 and Section 36 consents which relate to the use of gas in new power station developments;

* To confirm that the best judge of the type of plant to be developed in a particular location is the market;

* To confirm that the requirement for all applicants to have considered the option of combined heat and power (CHP) is not just the stricter consents policy in a different guise. There are sufficient tax incentives for developers to use CHP where technically and commercially feasible.

The report also argues that constraints on global gas turbine manufacturing capacity and current market conditions will act as natural controls on the number of new gas-fired stations that can be developed in the UK, preventing any possible renewed dash for gas.

Note to editors

1.The Report is available in PDF format (37k)

2.The UK Offshore Operators Association (UKOOA) is the representative organisation for the UK offshore oil and gas industry. Its 31 members are licensed by the British Government to explore for and produce hydrocarbons in UK waters.

Further information from:

Trisha O'Reilly UKOOA Press Office Tel: 020 7802 2422/2400 Fax: 020 7802 2401 Email: toreilly@ukooa.co.uk Pager:0941 120394

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