Ofgem Publishes Initial Proposals for National Grid LNG Facilities Price Control (UK)

Ofgem today published initial proposals for the price control of Liquefied Natural Gas (LNG) storage facilities run by National Grid Liquefied Natural Gas (NG LNG).

NG LNG owns and operates three LNG storage facilities offering a combination of commercial and regulated services. The regulated services are subject to a price cap set by Ofgem that was last reviewed in 2008. Since then, there have been a number of significant changes in the marketplace which have led NG LNG to ask for a review.

Following consultation, Ofgem’s initial proposals include:

– the continuation of price caps, with proposed increases

– the control should only deal with the short term funding of the facilities until March 2013

– long-term funding issues should be considered as part of Ofgem’s upcoming transmission and gas distribution price controls, due to be implemented on 1 April 2013.

Ofgem’s initial proposals document considers the operating and capital expenditure submitted by NG LNG and will engage in further discussions with interested parties prior to issuing our final proposals. The deadline for responses to the consultation is 20 December 2010. Ofgem will publish Final Proposals for this control in January 2011.

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Source: Ofgem, November 23, 2010