Energy regulator gas plans ‘hindering competition’

Cheaper energy, job creation and the diversity and security of energy supply are being thrown back in the faces of foreign investors, according to the US-owned Shannon LNG.

Paddy Power, CEO of company, said a €1bn investment for the Shannon estuary is being put “at risk” by the Commission for Energy Regulation.

Planning permission was secured by Shannon LNG for a €600m liquidified gas terminal in 2008 and the firm is planning a €400m Combined Heat Power plant at the 287-acre site at Ballylongord, Co Kerry, in tandem with the LNG plan.

The LNG project is to provide 650 jobs during the four-year construction phase, and 50 permanent operational jobs thereafter.

However, the CER’s proposal that all gas suppliers, including Shannon LNG, pay for the country’s two inter-connectors, which supply 95% of the country’s gas, has placed the Shannon LNG plan in doubt.

Mr Power said the CER’s new tariff structure for gas inter-connectors could cost Shannon LNG €85m per annum, “and is not a situation we could live with”.

“They want us to pay €85m a year for something that we want to compete against,” he said. “They want us to pay for our competition and subsidise UK suppliers of gas into Ireland.”

At a briefing to Clare Co Council, Mr Power said that Shannon LNG “will never use, and not even be able to link into, the inter-connectors we are being asked to pay towards”.

Stating that Shannon LNG has already spent $62m (€47m) on the project, Mr Power compared the situation to the State protectionism provided to Aer Lingus in the 1980s.

Mr Power said the tariff “is definitely giving selective protection to the shippers of gas into Ireland through the inter-connectors that Bord Gáis own”.

Mr Power admitted that the project has been effectively on hold since the CER the tariff structure in Jan 2011, adding that he has made “no progress” after meeting with government ministers on the issue.

The builder of the interconnectors, Bord Gáis Networks, has said that if the CER tariff is not implemented, higher energy prices in Ireland will cost consumers €40m a year.

In response, Mr Power said: “For someone to say that competition could raise prices is a new economic theory. The more competition you have, the more you drive prices down.”

Mr Power said that the experience has shown that, “in our industry, Ireland is not open for business”.

Mr Power said gas is going to be the fuel of the 21st century due to its abundance, but described Ireland’s strategic decision of importing all of this gas through the UK as “nuts”.

He said the LNG terminal will give Ireland access to cheap gas from around the world. “We don’t have any access to cheap gas here in Ireland,” he said. “Gas in Ireland costs 40% to 50% higher than in Britain.

Mr Power described the CER stance as “absolutely anti-competitive, discriminatory and contrary to European gas directives. We believe that there are state aid issues involved here as well.”

The Minister for Energy, Pat Rabbitte has already ruled out intervening in the dispute, and the CER is due to make its final decision on the tariff structure in May.