§ Mr. CotterTo ask the Secretary of State for Trade and Industry what assessment he has made of the effect 465W the new Bacton-Zeebrugge gas pipeline link between Britain and continental Europe has had on industrial gas prices in the UK. [148300]
§ Mr. HainA major cause of the price rise has been arbitrage across the UK-Belgium interconnector with high oil related gas prices in continental Europe. This has been made worse by the lack of liberalisation and competition in the Continental market and the consequent absence of real gas to gas competition.
The high wholesale price has led to sharp increases in the price of gas to industry—particularly companies with contracts tied to the spot price.
While arbitrage is an accepted market mechanism, the Government have had concerns about aspects of the operation of the interconnector. My right hon. Friend the Secretary of State for Trade and Industry therefore wrote to Commissioner Monti requesting a Commission competition inquiry into the interconnector. I am pleased to say that on 1 February the Commission announced that they would be looking into this.
In the meantime the Government will be pressing for increased liberalisation and competition in the Continental market. We firmly believe that this is the key to a long term solution.