The CC has been reviewing the undertakings that were first given by Centrica Storage and Centrica following its acquisition in 2002 of the Rough gas storage facility. The CC has confirmed its provisional decision made in January that it intends to keep the undertakings in place but it will vary some of the restrictions.
Rough is a gas field in the North Sea used to store gas in the summer and deliver it in winter when the gas is needed to help meet higher demand. Rough provides the majority of Great Britain's gas storage for the winter.
Roger Witcomb, CC Deputy Chairman and a member of the Centrica Review Group, said: "Taking into account all the evidence we have seen, we were not persuaded that market conditions have changed enough to warrant removing the undertakings. While there has been a significant increase in the available capacity for importing gas to Great Britain, we found that Rough still has significant market power and Centrica remains by far the largest domestic gas supplier in the UK so Centrica’s ownership of Rough would still allow it to disadvantage its competitors.
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"We also decided that new EU legislation affecting gas storage did not remove the need for the detailed and specific protections of the undertakings but we have varied the mechanism restricting Centrica's access to Rough more closely to align the undertakings with the EU legislation. The cost of continuing the undertakings is small compared with the potential detriment that would occur in their absence but we have decided to vary the undertakings in some areas, which will reduce the burden on Centrica.
"The undertakings were put in place after the investigation of the merger in 2003 to prevent Centrica from using its ownership of Rough to discriminate in favour of itself and against other users of Rough (particularly competitors in the retail gas market) in giving access to Rough capacity and to stop it disadvantaging other market participants in a number of other ways through its operation of Rough. The CC believed that this would have had the effect of weakening competition, with the likely consequence of higher end-user gas prices than would otherwise have been the case."
The varied undertakings will maintain restrictions on Centrica but make alterations to limits on the amount of Rough capacity that Centrica's wider group would be able to purchase from CSL as well as varying other restrictions.
(CD)
