Memorandum submitted by BOC Gases (BOC) (CEAR 02)
1. BOC
has owned and operated industrial gas producing plants in England and Wales for
many years and presently operates six very large complexes with an annual
electricity consumption approaching 2TWh making BOC amongst the very largest
industrial electricity customers in Britain.
2. The production of industrial gases by air
separation is a very energy intensive and the electricity required to drive the
process can be considered our raw material. The level of electricity prices is
of the utmost concern to BOC and its customers many of whom such as those in
the steel and chemical industries are battling to survive in tough global
markets.
3. BOC has seen its electricity costs more than
double during the period 2003 to 2006.
4. BOC believes that the electricity and natural
gas supply industry is well resourced and well organised. Generally speaking
the market is dominated by very large companies and customers are at a
commercial disadvantage.
5. Energy customers require an effective and
well resourced consumer organisation to represent electricity customers'
interests with the aim of counterbalancing, to the extent possible, the
inherent disadvantage energy customer of whatever size have.
6. While BOC has great respect for Ofgem (the
Office of Gas and Electricity Markets) whose duty to protect customers is,
while a primary one, only one of a number of duties. BOC believes that a body
such as the present energywatch organisation with a specific and focused
purpose to look after customers is required.
7. BOC believes that energywatch has
an important role in championing the interests of customers of whatever size
and not least the large industrial ones such as BOC. An important example of
this is energywatch's recent successful campaign to improve the increase in
transparency of near real time information of natural gas flows. This allowed
the gas market to operate more efficiently during the winter of 2006/2007 to
the benefit of all customers.
8. From the above it can be seen
that BOC believes that a focused energy consumer organisation is the most
effect way to attempt to protect customers' interests.
9. BOC understands that as the present bill has
it the energy customer role of energywatch will be subsumed within a more
general consumer protection organisation.
10. This raises concerns that the new
organisation's resources and priorities will not allow all energy customers'
needs and interests to be sufficiently protected. Also in particular large
energy customers who are sometimes, mistakenly, believed to be large enough to
look after themselves.
11. The present energywatch has rights and duties
in relation to the membership of a number of energy supply industry bodies,
such as for example the Balancing and Settlement Modification Panel and the
Connection and Use of System Code Modification Panel. This membership is very
valuable from a customer viewpoint as it provides an oversight role on proposed
changes to energy industry rules which can and do effect customers' interests.
In addition energywatch is able to propose modification to the rules such as modification
006 to the Uniform Network Code which changed the rules to allow greater
transparency of information in the gas market.
12. BOC is concerned how under the new arrangements
set out in the present bill such rights and obligations as outlined in para.11
above would be effectively discharged in the energy customers' interest and for
their legitimate benefit.
April 2007
