Ofgem approves deal to maintain UK gas import capacity

Ofgem Approves Agreement to Secure UK Gas Import Capacity With Belgium

Ofgem's Approval and Its Impact on UK Gas Imports

Background: Declining Gas Imports and Interconnector Challenges

LONDON, Oct 22 (Reuters) - UK energy market regulator Ofgem said on Thursday it has approved an agreement between Interconnector Limited and National Gas to maintain gas import capacity through the gas pipeline between Britain and Belgium.

• Gas imports to Britain via interconnectors with Europe have declined in recent years because of costs and technical constraints, although such links can play an important role in meeting demand during periods of high consumption

Technical and Financial Constraints on the Belgium-Britain Interconnector

• The capacity of the two-way Belgium-Britain Interconnector has been reduced due to rising fixed maintenance and operation costs

Details of the Approved Agreement

Importance of Maintaining Gas Links

• "Maintaining these important gas links is important as longer-term changes to the energy system continue. We have approved the agreement needed to maintain this important capability, and, as such, are consulting on the proposed regulatory mechanism for recovering its costs," said Jack Presley Abbott, director of energy systems management and security at Ofgem

Consultation on Regulatory and Financial Mechanisms

Proposed Licence Changes and Cost Recovery

• The consultation is on proposed licence changes and financial instruments which would enable National Gas to recover the costs of arrangements designed to maintain gas import capability between Britain and continental Europe

Future Outlook for UK Gas System

Reliability and Flexibility Amid Changing Supply Patterns

• Ofgem added that the UK gas system operates reliably and is expected to meet  demand under normal conditions. The proposal is aimed at keeping existing capacity and flexibility as supply patterns change over time

(Reporting by Nina Chestney, Editing by Louise Heavens)