The energy regulator OFGEM has confirmed that it will not introduce a short-haul tariff for gas transportation in October when the new pricing regulations come into play. The new regime removes the “short haul tariff” which is based on how far gas must travel. This greatly benefits the Tees Valley, who pay much lower rates due to their close proximity to the North Sea. The new tariff is set to be applied from October 2020 and will hit Teesside based companies especially hard.
This leaves a significant tranche of gas consumers in the North East of England facing huge uncertainties. Brexit and the ongoing coronavirus pandemic have already burdened these businesses. These firms make a substantial contribution to the national and regional economy in terms of the export value of the products they make.
OFGEM have previously acknowledged that the changes happening to gas pipelines would need to happen as a package of other reforms but implementation of this may not be seen until October 2021 if at all. A year may not seem like long, but it could see the end of many of these firms.
“The impact on Teesside would be devastating. Local energy-intensive process industry firms, which employ many people from my Stockton North constituency, would loss out on millions of pounds each year with the reforms. Brexit and now the Covid-19 pandemic have left the industry already facing many uncertainties – these changes only add to the pressures faced and could result in total decimation of our local industries.
“OFGEM know these firms rely on the short haul tariff to remain profitable. Making Tees Valley firms pay millions more for the same services that they have been using for decades offers no benefit to anyone and is grossly unfair.
“I’ve submitted several written parliamentary questions on this matter with very little in the way of response from the Government – they are truly keeping their head in the sand over this issue. OFGEM may be an independent regulator but it is crucial they face robust scrutiny when their actions could have such a catastrophic effect, as this one will on areas like Teesside. It feels to me like the Government are simply passing the buck yet again.
“It is nonsensical to push through EU regulations after we have left. Once again it is Teesside who loses out.”