Over the past six months a working group of the Westminster All Party Parliamentary Group on Energy Costs has investigated the workings of the Great British (GB) wholesale gas market to ensure that the GB wholesale gas market is working effectively to provide confidence to consumers, regulators, government and industry participants.
Its report has been designed to complement the work by the Competitions and Markets Authority (CMA) on the wholesale electricity markets.
In line with the preliminary findings made by the CMA published 18 February 2015, overall the working group of the All Party Parliamentary Group on Energy Costs found that the GB wholesale gas market benefits from a reasonable degree of liquidity, transparency and a wide range of competitive market participants. The report confirms the UK’s greater reliance on imported gas and the value of maintaining domestic gas production within an increasing globalised gas market.
The key findings of the report are as follows:
Liquidity: Britain is the only European country that has a gas market that meets EU liquidity targets. The liquidity levels are such that it is considered in Europe to be the only fully functioning gas market.
Transparency: Britain’s gas market is highly transparent. Infrastructure operators, such as National Grid, are required to publish high levels of data and information, some near real-time or within day, and the remainder at the end of the day. This information is freely and widely available to any interested party.
Number of participants: with more than 200 companies licenced to trade gas, the British market has demonstrated that it is an attractive place for people to do business. This includes small local cooperatives, through to large international oil and gas producers and utilities.
Ease of entry and exit: Britain operates a licensing regime for the majority of market activities run by the regulator Ofgem. These licences are inexpensive and there are relatively few barriers to securing the appropriate licences, provided that the applicant is a reasonable and prudent company.
Lord Palmer, Chairman of the All Party Parliamentary Group on Energy Costs, said: “This is the definitive guide to the British wholesale gas market. It is often discussed but seldom fully understood because the market is complex. The report shows the UK market to be the most competitive and transparent in Europe.”
ICIS, a provider of wholesale energy market prices and analysis, was a co-sponsor of the report. Richard Street, head of Regulation and Compliance at ICIS commented: “It is important that energy markets operate in an open and transparent way, and as such as we are proud to be one of the co-sponsors of the report.
“These conclusions from an independent investigation will serve to increase confidence that Britain has a fully functioning and competitive wholesale gas market.”