Re: IPE gas price increase of 50 % -> 1000%
Hi Heinbloed,
Good to see someone else has noticed this!
The situation is actually worse than this ... just a few weeks ago, the UK within-day price for gas was as low as 15p/therm. Last week, it peaked at 160p/therm or so. The current price for December is over 100p/therm, compared to approx 30p/therm last year. January and February are at similar levels.
Below doc is the submission from BGE for price increases. I haven't read through it in detail, but the cost of procurement (i.e. IPE costs) is €291m, compared to €569m total costs, or 51%. VAT is probably on top of this.
http://www.cer.ie/CERDocs/cer05003.pdf
NOTE : BGE still have access to some cheap gas from Kinsale, so not all gas is procured from the UK at IPE rates.
However, as BGE supplies of cheap gas from Kinsale are dwindling, and Corrib will take some time to get out of the courts, we can expect BGE prices to be linked progressively more to the IPE in the coming years.
I wouldn't be surprised to see price increases of OVER 25% next year, and again the year after. However, it all depends on supplies into the UK, Liquefied Natural Gas, and supplies coming from Europe. LNG is expected to bring prices down somewhat.
The price of diesel is approx 100 p/therm as a comparison, and may act as some form of ceiling on gas prices.
As for "Plan B", there is none AFAIK. Its a market, and the EU has decided thats the best way to manage prices and supply etc. The only upside is that if there is a shortage of gas, domestic customers will be the last to be shut off. Power generation would be the first to go, and would be asked to switch to diesel. They have to keep 5 days stock of diesel on each site.