BRITISH GAS CUTS PRICE TO POWER STATIONS

The dispute between British Gas plc and power station operators in the U.K. has taken a new turn. In response to pressure from the Office of Gas Supply (Ofgas), British Gas has cut prices but placed a ceiling on the volume of new gas supplies that will be available for power station fuel starting in 1995. Earlier this year, British Gas announced a 35% increase in the price of power station fuel to 22-23 pence (12-13 cents)/therm (100 cu ft) in a bid to ration supplies to that market. The new

Sept. 30, 1991

2 min read

The dispute between British Gas plc and power station operators in the U.K. has taken a new turn.

In response to pressure from the Office of Gas Supply (Ofgas), British Gas has cut prices but placed a ceiling on the volume of new gas supplies that will be available for power station fuel starting in 1995.

Earlier this year, British Gas announced a 35% increase in the price of power station fuel to 22-23 pence (12-13 cents)/therm (100 cu ft) in a bid to ration supplies to that market.

The new schedule sets power station prices at 19.6-20.3 pence/therm.

However, only 1 billion therms (274 MMcfd) of natural gas for power stations will be available starting in 1995, with another 500 million therms (137 MMcfd) starting in 1996.

Industry sources say those volumes are far below the volumes sought by power station operators and may lead to the abandonment of some construction plans.

About 75% of the gas for power generation is supplied by independent gas companies or directly from new field development off the U.K.

The biggest independent power plant is a 1,725,000 kw cogeneration unit at Teesside in Northeast England. It's under construction by Teesside Power Ltd. in which the major shareholder is Enron Corp.

The company concluded a financing of 795 million ($1.36 billion) through a group of 14 underwriters and 17 banks.

Manufacturers Hanover Ltd. acted as agent for the transaction.

Gas for the Teesside project will come from Amoco (U.K.) Exploration's Everest and Lomond fields to be delivered through the new Central Area Transmission System (CATS) pipeline.