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Gas Market

Enterprise, Trade And Investment – in the Northern Ireland Assembly at 3:00 pm on 3rd November 2009.

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Photo of Mark Durkan Mark Durkan Leader of the Social Democratic & Labour Party 3:00 pm, 3rd November 2009

2. asked the Minister of Enterprise, Trade and Investment to outline the time frame for the establishment of the all-island gas market, and if she envisages a consequential reduction in gas costs for consumers.     (AQO 304/10)

Photo of Arlene Foster Arlene Foster DUP

The time frame for an all-island gas market is dependent on the establishment of a common system for operation of the two transmission networks. That includes agreement on system-operator arrangements that will give government and industry confidence that the transmission of gas across the two networks will be handled independently, efficiently and cost-effectively.

Primary legislation will be needed in both jurisdictions. It is unlikely that that legislation could be passed by the Northern Ireland Assembly before late 2011.

The quantifiable operational benefits of the project are modest. However, they could still help to combat any future increases in the cost of gas. Significant benefits for consumers could, however, come from enhanced security of supply, greater transparency, investor confidence and future opportunities to develop competition in the retail gas market.

Photo of Mark Durkan Mark Durkan Leader of the Social Democratic & Labour Party

I thank the Minister for her answer, which acknowledges the benefits of a potential single gas market.

Is there no room for improvement on the timetable, particularly with regard to legislation? To say that it will be the end of 2011 before legislation is passed through the House sends a signal to the sector that the Assembly is not serious and is not pushing the matter forward.

Photo of Arlene Foster Arlene Foster DUP

From this jurisdiction’s point of view, the reality is, actually, quite the contrary. On 22 October 2009, I met my counterpart, Minister Ryan, at the IBEC-CBI Joint Business Council energy summit in Edinburgh. We both confirmed our support for the development of common arrangements for the transmission and trading of gas based on the mutual benefits that regional co-operation on gas can bring.

There is an issue about the independence of the systems operator. Northern Ireland has an independent systems operator. However, the Republic of Ireland currently does not. It is carrying out work on the different models that it can adopt to satisfy its energy regulator. Frankly, until it does so, we cannot move forward on the issue. Therefore, the delay is not of Northern Ireland’s making. There needs to be an independent operator in the Republic of Ireland, as well as in Northern Ireland. We must wait to hear from the Department of Communications, Energy and Natural Resources in the Republic before we can make progress.

Photo of Martina Anderson Martina Anderson Sinn Féin

Go raibh maith agat. Is the Minister engaging with her Executive colleagues to address the failure to make natural gas available in social housing? I am aware that the heating replacement programme for social housing has ground to a halt. I am also conscious that there is a pipeline outside Altnagelvin Hospital that could be used to serve the hospital and other public buildings. Is the Minister in discussion with her ministerial colleagues about how the situation can best be improved?

Photo of Arlene Foster Arlene Foster DUP

I am awaiting the results of a consultation on further roll-out of the natural gas network in Northern Ireland. The Member will not be surprised to hear that I believe that that would bring benefits to consumers other than those who currently have the advantage of a natural gas supply. I hope to receive the report very soon. When we know the outcome of the consultation, we will be able to speak more about engaging with other Departments.

Photo of Stephen Moutray Stephen Moutray DUP

Will the Minister indicate what can be done for gas customers who wish to change supplier?

Photo of Arlene Foster Arlene Foster DUP

A lot of people wish to change to natural gas. I am encouraged by that, because we want to move away from high dependency on fossil fuels, including coal. The Belfast gas market has about 112,000 domestic consumers. That market has been fully open to supply competition since January 2007. The current switching system is capable of switching up to 50 customers a week. Significant investment in the customer switching system has not been justified, given the level of competition in the Belfast gas market. However, a number of companies hold gas supply licences in the greater Belfast area, and a number of business customers have switched supplier. However, as yet, no new gas supply licence holders are actively competing for business in the domestic gas market. Hence, the switching systems have not been developed to support anything more than a moderate level of domestic switching.

In order to obtain an independent assessment, the Utility Regulator intends to engage consultants to determine the exact capabilities and limitations of the existing gas switching systems and to conduct an assessment of the cost of the proposals. The Utility Regulator is discussing the optimal solution with Phoenix Natural Gas and potential suppliers with a view to reaching consensus on the way forward. I welcome the work that is being done on the issue of gas switching, and I look forward to the Utility Regulator’s report.

Photo of Leslie Cree Leslie Cree UUP

This issue is important. Is the Minister aware of any plans to create strategic gas storage on the island of Ireland and to provide for the importation of natural gas in a liquefied state?

Photo of Arlene Foster Arlene Foster DUP

A number of companies have shown an interest in developing gas storage off the coast of Northern Ireland as well as on the land mass. To date, companies have concentrated on carrying out research to determine whether gas storage can be provided by creating caverns in underground salt strata in the east Antrim area. That is a very exciting prospect.

The Department has recently completed a study on the geology of the offshore area along the Antrim coast to determine whether the suitable geological formations exist to store energy such as natural gas and compressed air below the seabed. I know that the Members for East Antrim — Mr Neeson in particular — are interested in that issue. That work is continuing, and it is very exciting for the area and for Northern Ireland.

Photo of David McClarty David McClarty UUP

Mr Armstrong is not in his place for question 3.