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Last Updated: Thursday, 26 August, 2004, 17:07 GMT 18:07 UK
Gas deal 'may cut prices'
Gas pipes
Phoenix Gas had suspended the price increases

Phoenix Natural Gas has reached a deal with the energy regulator which should help reduce price rises in Northern Ireland.

It comes just a few weeks after the company dropped plans for a 20% rise in prices following a row with its gas supplier.

The company had blamed the rise on an argument over wholesale prices, but it subsequently announced it had reached agreement with its supplier Centrica.

The wholesale price of gas has now been fixed until the end of next month.

However, gas only accounts for half of the domestic bill - with the remainder used to pay back the company for the money spent on its network of pipelines.

The new deal, announced on Thursday, will allow Phoenix to write off the cost for some of that investment over a longer period of time than was originally planned.

The potential now exists to move forward with transparent and sustainable gas pricing
Eleanor Gill
General Consumer Council

The Northern Ireland Authority for Energy Regulation (NIAER) said this half of the bill should now rise by no more than inflation and might even fall.

BBC Northern Ireland business editor James Kerr said: "With wholesale gas prices currently very high, there'll still be upward pressure when the price review comes around.

"However, the announcement and more competition in future, should mean that if gas bills do rise, it's at a more acceptable rate."

Peter Dixon, chief executive of Phoenix Gas, said customers would benefit.

"We're now in a position to deliver the lowest possible prices for our customers in Greater Belfast," he said.

Eleanor Gill of the General Consumer Council welcomed the announcement, which, she said, would provide consumer confidence in gas.

"The potential now exists to move forward with transparent and sustainable gas pricing," she said.

The agreement has also been welcomed by Northern Ireland politicians.

George Dawson of the DUP said it would help stabilise the gas industry in the province.

"The task now for Phoenix, the regulator and the General Consumer Council, is to ensure that any future price rises are kept to a minimum," he said.

'Confidence in industry'

Sean Farren of the SDLP said the benefits of the arrangement must reach the consumer in the form of lower prices.

"Under no circumstances should the longer contract be a signal for any increase," he said.

Mitchel McLaughlin of Sinn Fein said: "Now that the Centrica contract has been resolved and with the extension licensing agreement allowing for a longer-term repayment of investments, people will be closely monitoring the annual price review in October to ensure that customers continue to get value for money."

Sir Reg Empey of the Ulster Unionist Party said the uncertainty had been imposing an artificially high cost on consumers.

"The result of this arrangement should be to reduce the anticipated increases that could come through in the autumn," he said.

Sean Neeson of the Alliance Party said he hoped the agreement would restore confidence in the natural gas industry in Northern Ireland.

"However, I am concerned about the huge increase in gas prices that were made this week by British Gas, for consumers in Great Britain. Obviously, this will have an impact on gas prices here," he said.




SEE ALSO:
Gas price hike suspended
08 Apr 04  |  Northern Ireland
Demand to drop gas price hike
23 Mar 04  |  Northern Ireland
Anger over gas price hike
19 Mar 04  |  Northern Ireland
BG sells stake in gas distributor
21 Nov 03  |  Business
Fuel poverty 'highest in UK'
19 Nov 03  |  Northern Ireland


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