Minister welcomes gas memorandum of understanding

Energy Minister Nigel Dodds today welcomed the publication of a Memorandum of Understanding by Energy Regulators.

The Northern Ireland Authority for Utility Regulation (NIAUR) and the Irish Republic’s Commission for Energy Regulation (CER), have stated that they will work together to consider the merits of establishing common arrangements for gas in Northern Ireland and the Irish Republic.

The Minister said: “It is very important to assess the economic benefits which any future common arrangements for gas might provide. The ongoing work by both Regulatory Authorities is encouraging and has the potential to lead to positive benefits for gas consumers in both jurisdictions, but there must be clear benefits to consumers before a decision can be taken to fully commit to such arrangements.

“It also has the potential to build on previous successes such as the Single Electricity Market which became operational on 1 November 2007.”

The Memorandum commits both regulators to work to fully assess the merits of establishing common arrangements for gas in Northern Ireland and the Irish Republic whereby all stakeholders can buy, sell, transport, operate, develop and plan the natural gas market in both regions.

Minister Dodds continued: “A decision to proceed with implementing common gas arrangements for Northern Ireland and the Irish Republic is dependent on ongoing work by the regulators providing a clear assessment of positive economic benefits to consumers of any future arrangements.’’

“A larger gas market does however offer greater potential to attract new entrants and additional competition offers has the prospect of providing a number of important benefits to consumers, including increased choice, greater efficiency, lower prices and higher standards of service.”

The Minister added: “I look forward to seeing the Regulatory Authorities' further assessment of the advantages that a common approach on gas may deliver and their proposals to implement this in due course. This will allow full consideration of the benefits of establishing common arrangements by both departments in advance of a final decision to proceed with such arrangements. ’’

As part of the European Union, Northern Ireland (NI) and Republic of Ireland (RoI) are committed to the development of a single European gas market. The European Commission has put in place an overarching legislative framework within which all member states are working to achieve the single gas market which is designed to bring benefits to all European citizens and to contribute to Europe’s competitiveness.

Within this framework, cross border trading is developing and the interconnectivity of gas networks is increasing. Countries that are physically close are developing closer trading ties. In this environment the island of Ireland faces a unique challenge and a unique opportunity. On the one hand the island is far less interconnected than other mainland European jurisdictions but on the other, we have the opportunity to create common arrangements within the island, realising the benefits of this move for all consumers of gas and for the economies north and south. Furthermore, in the future it may be possible to align gas arrangements in both jurisdictions with that of Great Britain and the implementation of CAG (Common Arrangements for Gas) will make this more feasible.

The Department of Enterprise, Trade and Investment will continue to work closely over the coming months with the Department for Communications, Energy and Natural Resources and respective energy regulators to consider if there is economic benefit in developing proposals for common arrangements for gas. Further progress will be dependent on a more detailed economic assessment which will be provided at a later stage.

Notes to Editors:

1. Within the context of the Energy Market Development Framework agreed by DETI and the Department of Communications, Energy and Natural Resources in 2005, it was agreed to consider development of common arrangement for gas. This would include an assessment of the likely benefits to consumers and the necessary modifications to existing arrangements which would be necessary.
2. Preliminary work has been carried out by the Northern Ireland Authority for Utility Regulation (NIAUR) and the Commission for Energy Regulation (CER) in the Irish Republic and both bodies have agreed a Memorandum of Understanding on work to progress the project. A full cost benefit analysis on proposals for common arrangements for gas is expected in May 2008.
3. Northern Ireland and the Irish Republic are heavily dependent on natural gas for power generation. Common arrangements for gas covering both jurisdictions has the potential to provide customer savings and encourage new suppliers into the market.
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