Centrica announced in June that it intended to close permanently the Rough storage facility due to its physical deterioration. The closure can only happen if current undertakings required by the CMA have been removed. This led to Centrica and its subsidiary that operates Rough, Centrica Storage Ltd (CSL), requesting a review, or indeed the removal, of those undertakings.
The undertakings, put in place in 2003 and most recently amended by the CMA in 2016, include a requirement to keep CSL legally, financially and physically separate from its parent company Centrica, and to prevent CSL from discriminating in favour of Centrica or other users of Rough.
They also include an obligation for CSL to sell a specific amount of capacity before the start of each storage year, limiting the amount which can be supplied to Centrica and enabling Ofgem to vary the amount of capacity Centrica is required to offer for sale. The CMA panel members who will act as decision-makers are Martin Cave, Jayne Scott, Jon Stern and Anne Fletcher whose review is anticipated by the CMA to be completed by end-2017.
Centrica said last month it had been cleared by energy regulator Ofgem to sell some cushion gas from Rough. But Centrica clarified it had not yet received formal government approval to shut the facility for good, and therefore could not be sure when the final closure would occur.
Rough was used by between 15 and 20 market participants to store gas in the summer and deliver that gas to meet peak demand in winter, according to the CMA, which meant when fully operational it accounted for some 70% of the UK gas storage market by volume, capable of storing up to 150bn ft3, representing 6% of total UK annual gas demand. Interested parties wishing to comment on CSL's request to remove the undertakings is invited to contact: Rough-Undertakings@cma.gsi.gov.uk no later than 5pm on October 31 2017.
Mark Smedley
