National Grid signals gas price uncertainty for 2007-08

29 March 2007
Gas supplies may be uncertain and gas prices on the up in winter 2007-08, National Grid has warned.

In a report on future import streams, the network acknowledged that the winter just past had not enabled gas companies to test their capacity, because warm weather made for minimal demand.

It estimated that new sources of gas coming on stream over 2007 would deliver enough energy to offset the decline of sources in the North Sea and provide more than ten per cent of the gas British customers would use on an average winter's day.

Nevertheless, the grid acknowledged that British supply and gas prices remained vulnerable to possible price shocks in Europe.

"While National Grid's preliminary report forecasts an increase in gas supply compared to this winter, there can be no grounds for complacency," Steve Smith, Ofgem's managing director of markets, stressed.

Although this winter had been exceptionally mild, "no one can predict next winter's weather", he added.

The experience of 2006-07, when a record mild winter led to low demand and falling wholesale prices which suppliers then passed onto customers, could easily be reversed in the year to come, Mr Smith warned.

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