Gas customers escape price hike

Gas customers in Northern Ireland are to be spared from a major hike in prices due to a new deal between Phoenix Gas and Ofreg.

Phoenix Gas today confirmed that an agreement has been reached in principle with Ofreg to extend the recovery of the network investment from the current date of 2016 to 2046.

The new deal will not mean that gas bills will be reduced, however Phoenix has said that it does mean "longer-term pricing stability" to the market – eventually saving customers up to £25 million.

So far, Phoenix has spent around £400 million on creating the gas network in Northern Ireland and under the original terms it had until 2016 to recover the costs.

The average household bill for Phoenix comes to around £628, 22% (£138) of which goes towards this.

Commenting on the announcement, Iain Osborne, Chief Executive of Ofreg said that the new proposals were a "significant milestone” in building customer confidence and competition in the natural gas industry and added that the proposed agreement will remove the possibility of a substantial hike in gas network costs.

He continued: "These proposals offer a win-win for customers and Phoenix. The total amount payable by customers has been reduced and for the company it creates a stable basis for future investment and growth."

Peter Dixon, Chief Executive for the Phoenix Group, added that the deal is excellent news for natural gas consumers and for the future development of the natural gas industry in general in Northern Ireland.

He continued: “Subject to the drafting of detailed licence modifications and the outcome of the statutory consultation process, we would hope the new arrangements would be completed during the first half of next year. This brings longer-term pricing stability to a significant element of the end price to natural gas consumers in the Greater Belfast and Larne area and represents a very important milestone for the natural gas industry, ten years into its development.

“I would like to take this opportunity to thank everyone involved in the industry locally for their support and patience during these lengthy negotiations. The natural gas industry will have close to 104,000 connections by the end of 2006 and this agreement will underpin the advances in the Northern Ireland carbon footprint and help to cement the competitiveness of Northern Ireland industry in the global marketplace.”

(EF)