The Utility Regulator today initiates a review of Phoenix Supply Ltd gas prices.
This process is expected to run until an announcement of new prices in December, to take effect in early January 2009.
The review will follow the normal process for tariff reviews, and include Phoenix Supply Ltd, the Regulator and the Consumer Council, working in consultation with the Department for Enterprise, Trade and Investment.
Iain Osborne, Utility Regulator Chief Executive, said:
“ We have initiated this review, because the market situation is changing. We have promised that cost reductions will be passed to consumers at least as quickly as increases.
“On that basis, we have been monitoring wholesale gas prices for some time now, and the situation has now changed enough to justify a review of the Phoenix prices. We therefore informed Phoenix Supply Ltd and the Consumer Council early last week that we are instituting a review with immediate effect.
“However, it would be premature to speculate on the outcome and irresponsible to raise expectations of a price cut this winter. At this very early stage in the winter, gas wholesale markets are exceptionally volatile, being affected by an indirect link to oil prices but also by many other factors. These include the weather, concerns about infrastructure breakdowns, geo-political factors, levels of gas in store and prices elsewhere in Europe and the world. A premature cut that would have to be clawed back later in the winter is to be avoided.
“The timetable for the review is designed to avoid pass-through of wholesale volatility, since by December we will have a clearer view of market conditions in the key months of January and February.
“Our decision to proceed with this review has been taken in consultation with our key stakeholders in the Department of Enterprise, Trade and Investment and the Consumer Council, who also agree that a review is necessary.”
Mr Osborne also said:
“As in gas, we have been monitoring the electricity situation very closely. Electricity is a more complex industry and a greater number of factors have to be taken into consideration. We have been in discussion with NIE Energy and expect to make an announcement in the coming weeks as to whether a review is justified at this time”