New gas bill blow as pipeline shuts

Simon Duke and Tessa Thorniley, Daily Mail

21 August 2008

Families face even higher energy bills this winter following a massive rise in the price of gas yesterday.

Winter shortages?  A pipeline leak has increased UK gas price.

A leak in a key Norwegian pipeline sent the wholesale price of supplies to the UK soaring 14%, raising fears of winter shortages. The firm in charge of the North Sea pipeline said it could be shut down until next spring.

The news will come as another major blow to cashstrapped households, who have already suffered big rises in food and energy bills.

British Gas recently announced another 35% increase, while rival EDF increased bills by as much as 22%.

The latest price jump underscores Britain's growing dependence on overseas gas suppliers as North Sea reserves dwindle. About 40% of the gas used here will be imported this year, up from 27% in 2007.

The UK is highly exposed to even the smallest supply disruptions because it lacks adequate storage, with only 13 days of stocks compared to 99 in Germany and 122 in France.

Experts warned that unless wholesale prices fall soon, major suppliers will be forced to put up their charges again.

Analyst David Hunter, of energy consultancy McKinnon & Clarke, said: 'The amount of gas available from Norway will be cut significantly. The UK will be left to negotiate with Russia and the Far East or risk running low on energy.'

The prospect of another rise in bills will provoke anger as energy companies are currently posting record profits on the back of increases in the price of crude oil.

British Gas owner Centrica saw profits at its gas fields in the North Sea rise from £123m to £638m in the past six months, while its gas supply arm brought in a profit of £992m. Meanwhile, the average British Gas 'dual fuel' bill - for gas and electricity - is already above £1,300 a year, up more than £400 since January.

A spokesman for watchdog Energywatch warned last night: 'There'll be no respite for consumers.

'For the four suppliers who haven't raised prices for the second time this year (nPower, E.on, Scottish & Southern Energy and Scottish Power) it's now a matter of how much they will increase bills and when.'

More and more Britons are falling into fuel poverty, which is defined as spending over ten per cent of disposable income on heat and light. There are already an estimated 4.5m in fuel poverty, and the figure is expected to rise by at least a million this winter.

Centrica said last night: 'Norway has the capability to provide 25% of the UK's gas, but at this stage we can't tell the scale of the impact from the leak.'

The pipeline pumps gas from the Kvitebjoern field in the North Sea. An estimated 5% of Norway's total gas output goes through it.