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Centrica Storage Ltd and Centrica plc request to vary undertakings

The Competition & Markets Authority (CMA) has announced a consultation on Centrica's and Centrica Storage Ltd (CSL)’s request for a review of the Rough Undertakings. The CMA has also published a letter indicating that it will not prioritise enforcement actions against Centrica and CSL for 2016-17 as long as CSL undertakes certain measures.

CMA announces consultation on reviewing the Rough Undertakings

In 2003, following Centrica Storage Limited’s (CSL)’s acquisition of the Rough Gas Storage Facility from Dynegy Group, Centrica Plc (Centrica) and CSL gave undertakings (the Rough Undertakings) to the Secretary of State for Trade and Industry pursuant to the Fair Trading Act 1973. 

Today the Competition & Markets Authority (CMA) announced that they have launched a consultation on Centrica's and CSL’s request for a review of the Rough Undertakings (found here).

Centrica and CSL are seeking changes to the Undertakings which will provide the CMA an expedited method of changing the amount of capacity CSL is required to sell ahead of the Storage Year in response to a significant change to Rough’s physical capabilities.  The primary aim of Centrica's and CSL’s proposed changes is to ensure CSL is not required to sell more storage services than Rough can physically deliver.

This request was triggered by the reduction in Rough’s physical capabilities following the identification of an issue affecting the maximum operating pressure of the Rough wells (see REMIT 2015-33 revisions 1 – 5 for more details).

CMA publishes indication of application of Prioritisation Principles for Storage Year 2016/2017

In 2003, following Centrica Storage Limited’s (CSL)’s acquisition of the Rough Gas Storage Facility from Dynegy Group, Centrica Plc (Centrica) and CSL gave undertakings (the Rough Undertakings) to the Secretary of State for Trade and Industry pursuant to the Fair Trading Act 1973. 

Under the Undertakings, CSL is obliged to sell storage capacity ahead of the Storage Year.  This capacity is sold in the form of Standard Bundled Units (SBUs) (1 kWh/day withdrawal, ~66.6 kWh of space and ~0.35 kWh/day of injection) and Additional Space (space without injection and withdrawal rights).

On 18 March 2015, CSL announced that the physical capabilities of Rough had changed (see REMIT 2015-33 revisions 1 – 5 for more details).  As a consequence, CSL anticipates that it cannot use Rough to comply with its Undertakings obligations to sell capacity ahead of the Storage Year.

Today the CMA published a letter indicating how it intends to apply its Prioritisation Principles in relation to CSL’s Undertakings obligations to sell capacity ahead of the 2016/2017 Storage Year (found here).

The CMA anticipates that it will not prioritise enforcement actions against Centrica and CSL for not selling 455 million SBUs and 1534GWh of Additional Space ahead of the 2016/2017 Storage Year as long as CSL undertakes measures CSL has proposed which are designed to facilitate compliance with the intent of the Undertakings, including selling at least 340 million SBUs and at least 0.13TWh of Additional Space ahead of the 2016/2017 Storage Year.

More details about Centrica and CSL’s proposed measures for managing compliance with the Undertakings in the 2016/2017 Storage Year and the CMA’s letter regarding its enforcement priorities can be found here.

Enquiries

Centrica Media Relations: 0800 107 7014 

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