Gas shippers play a crucial role in the transportation and distribution of natural gas, ensuring a steady supply of this essential energy source to consumers and businesses alike. As intermediaries between gas producers and end-users, gas shippers are responsible for efficiently moving natural gas through the complex network of pipelines to its final destination. In this article, we explore the significance of gas shippers in the gas industry and highlight some key organizations and resources involved in this sector.
The National Grid is a prominent entity in the gas industry, responsible for managing the high-pressure gas transmission network in the UK. As a central player, the National Grid works closely with gas shippers to ensure the safe and reliable delivery of gas to distribution networks and, ultimately, to consumers. Their expertise and infrastructure are pivotal in maintaining the gas supply chain.
2. Ofgem (Office of Gas and Electricity Markets)
As the UK’s independent energy regulator, Ofgem plays a vital role in overseeing the gas market. They regulate gas shippers and other industry participants to ensure fair practices, protect consumers, and promote competition. Their website provides valuable insights into gas industry policies, regulations, and updates.
3. Energy UK
Energy UK is a prominent trade association representing gas shippers, energy suppliers, and other industry stakeholders. Their platform serves as a valuable resource for information related to the gas industry, including the role of gas shippers, market developments, and industry trends.
4. The Gas Forum
The Gas Forum is a collaborative platform that brings together key players from the gas industry. Here, gas shippers, suppliers, and other stakeholders engage in discussions, share knowledge, and address challenges facing the gas sector. It offers a unique opportunity to stay updated on the latest developments and innovations within the gas transportation and distribution domain.
Gas Safe Register is the official gas registration body in the UK, responsible for ensuring the safety and competency of gas engineers and professionals. Their website serves as a reliable source to verify the credentials of gas shippers and professionals involved in gas-related activities, guaranteeing the safety and quality of gas transportation services.
What Are Gas Shippers?
Gas shippers bring the gas from storage, then sells it to energy suppliers. They arrange for the gas to be transported through the networks that are owned by gas transporters. Under the Gas Act 1986, all gas shippers are required to have a license from Ofgem.
What Is The Difference Between A Supplier And A Shipper?
Gas suppliers are the energy companies that purchase gas on the wholesale market, then sell it to businesses and residents. Gas shippers on the other hand arrange for transporters to take the gas from terminals and storage facilities to the consumers.
Who Do Gas Shippers Pay?
To run their gas through the national transmission network, gas shippers have to pay the National Grid. This fee also covers the transporting of gas to businesses and homes.
The figure that gas shippers pay to the National Grid is passed on to customers’ bills. This is for the maintenance and running of the 24-hour gas emergency helpline.
Why Are Gas Shippers Important?
The gas market hosts a number of different players that all play vital roles. There are producers who operate offshore gas production facilities, suppliers that buy the gas from producers then sell it to businesses and households but the main player in this industry is the gas shipper.
Gas shippers are the link between the producers and suppliers. They are the glue that holds the market together, without them we wouldn’t have an energy industry. This means that any failures on the shipper end will end up having critical impacts on the entire market.
Do Gas Shippers Balance The Market?
Shippers have the incentive to create balance in the gas markets. Each day, inputs and outputs should be balanced, meaning what goes in, should be the same as what comes out.
The National Grid Gas is responsible for ensuring demand and gas supplies are matched on a daily basis. If this doesn’t happen, then shippers will be commercially exposed.
How Do Shippers Transport Gas?
Gas comes into the UK through sources such as imports, offshore production, onshore production and gas storage sites. It is transported to consumers through two methods:
- National Transmission System (NTS)
- Local Distribution Networks (DNs)
The NTS is operated by National Grid, moving gas at around 23 mph from power stations to the local distribution network, taking on average one day to move from one side to the other.
DNs move gas from the NTS to homes and businesses through four companies:
- National Grid Gas
- Scotia Gas Networks
- Northern Gas Networks
- Wales & West Utilities
There are eight networks, all covering various areas across the UK. There are also numerous independent and privately-owned Gas Transporters (iGTs) that own around 1 million connections.
Gas shippers don’t hold responsibility for the movement of gas through the system. Their job is to specify where the gas enters and leaves the system. Shippers have the responsibility of making sure the gas that is entered meets the daily balance.
What Impact Do Gas Shippers Closing Have On The Energy Market?
In recent news, gas shipper CNG has stopped delivering gas. This has led to predictions there will be a domino effect of energy suppliers going bust. With up to 40,000 businesses facing increased bills due to suppliers ceasing trading, this will add to the current energy crisis.
Why Does A Gas Shipper Stop Delivering?
CNG had been struck with customer bankruptcies, with unpaid bills for gas shipments, leading to huge strains on their finances. In 2021, many energy suppliers have collapsed, with 3 ceasing trading in one month. With energy prices soaring, gas shippers stopping deliveries could see this number skyrocket.
Gas shippers can be impacted by numerous factors. In this scenario, CNG was forced to close due to a lot of their clients stopping trading as a result of the current energy crisis that has gripped the nation.
This unprecedented increase in global gas prices has placed a huge financial strain on many energy suppliers, meaning they are put out of business. This then places pressure on gas shippers, as they will also lose business, working their way up the chain.
What Does Gas Shippers Closing Mean For Energy Suppliers?
Well, many energy suppliers are served by the gas shipper CNG. If they are to exit the wholesale gas market, these energy suppliers will find it extremely difficult to locate a new gas supplier, resulting in more firms going out of business.
CNG supplies gas to 18 utility companies in the UK. These energy companies have been advised by CNG that they will have to purchase gas from another shipper, with will lead to a huge price spike in costs to hundreds of small businesses.
They will now have to pay the market rate, instead of the prices that were previously agreed.
Do Energy Suppliers Have To Pay More When A Gas Shipper Goes Bust?
The answer is likely yes. But how much more do energy suppliers have to pay when a gas shipper goes bust?
Suppliers that do not have a gas shipper are required to pay the National Grid for the cost incurred. This figure is the equivalent of up to three times the implied wholesale gas price in the Winter 2021-22 default tariff cap.
Energy suppliers will have to pay gas transporters quickly as security. This will be based on their gas volume, with many unfortunately unable to do so as they are already paying extremely high gas prices.
This leaves the question of whether other gas suppliers will be prepared to agree on a contract with energy suppliers, given the difficulties many are facing. With more suppliers taking this route, this will reflect on the entire gas system, meaning higher costs will be spread across all users, impacting customers too.
What Does Gas Shippers Closing Mean For Customers?
With energy suppliers finding it difficult to find a new supplier, this then leads to more going bust, creating a domino effect to customers. Just this month, over 250,000 customers were placed onto Ofgem’s “supplier of last resort process”. 2 million customers have been impacted by energy suppliers closing down.
Energy suppliers have to sell energy at a price that is way lower than it costs to buy, meaning their business is unsustainable, resulting in the closure of the company. This leads to job losses and customers being forced to move suppliers.
Customers will not have any impacts on their energy supplies, with credit balances also transferred over to their new supplier, however, they will likely face higher prices compared to their previous tariff and rates.
These customers will be placed on the standard variable rate, likely a lot higher than any fixed deal they could have got with their previous supplier.
Manufacturers like chemical and steel producers have been warned production may have to pause due to rising energy costs. This has resulted and will lead to many more small businesses and companies that are reliant on gas to go bust.
What Else Is Impacted When A Gas Shipper Closes?
Not only are small businesses and households hit hard, but schools, hospitals and other public sectors will be impacted. CNG directly supplies these institutes, creating a wide-scale crisis across the country.
Does The Gas Supply Stop If A Gas Shipped Stops Trading?
No, when a gas shipper ceases trading, there are industry processes in place that makes sure that customer will still have a continuous, uninterrupted gas supply. There are plans set for when this happens, ensuring customers are protected.
Are There Processes In Place When A Gas Supplier Closes?
With shippers having such an essential role in the energy industry, it makes the situation a lot worse. Suppliers cannot sell their gas to customers without gas shippers, placing them in trouble.
If a supplier goes bust, there are processes in place such as the ‘supplier of last resort’ or SoLR. However, for gas suppliers stopping deliveries, there isn’t an arrangement in place, meaning the industry is in the uncharted regulatory territory.
How Is The UK Impacted By Gas Shipper Closing?
The UK is facing a difficult time right now, with many bracing for a tough winter ahead. There are fears that the UK only stores enough gas reserves to match four to five winter days worth of demand.
With other countries such as the Netherlands and Germany having more than 9 and 16 times the size storage as the UK respectively, the nation is more at risk of higher wholesale gas prices than other nations.
What is an independent gas transporter?
An independent gas transporter (IGT) is a company that owns and manages a distribution network for transporting gas to homes and businesses in the UK. They operate independently from the National Grid and are licensed by Ofgem, the UK’s gas industry regulator. IGTs play a significant role in the gas industry, ensuring that gas is delivered efficiently and safely to consumers across the country.
As part of the gas supply chain, IGTs work with gas shippers, suppliers, and other stakeholders to transport gas through their network of pipelines. They are responsible for the movement of gas from producers to consumers, making sure the gas reaches its intended destination.
IGTs are regulated by Ofgem to ensure fair competition in the gas market. They must obtain a licence from Ofgem to operate and comply with strict regulations to protect consumers and promote a competitive gas market.
One of the key functions of IGTs is to read meters and calculate the amount of energy used by customers. They work closely with energy suppliers to bill consumers accurately for their gas usage.
Overall, IGTs play a vital role in the UK’s gas industry, supporting the reliable and efficient supply of gas to homes and businesses and contributing to the country’s energy security and sustainability.
How can I tell if my business is using an independent transporter?
To determine if your business is using an independent gas transporter (IGT), you can start by checking your gas bill or contacting your gas supplier. If your gas supply is managed by an IGT, it will be specified on your bill or mentioned by your supplier when you inquire about your gas arrangements.
Another way to identify if your business is served by an IGT is by understanding the jargon used in the gas industry. Terms such as “IGT,” “independent gas transporter,” or “transporter” may indicate that your gas supply is not managed by the National Grid or a major gas distribution network.
IGTs operate in specific regions or areas, and their licenses are granted by Ofgem, the gas industry regulator. You can find information about licensed IGTs in your region on Ofgem’s website or by contacting them directly.
If you find that your business is supplied by an IGT, it’s essential to be aware of the services they provide, as well as any specific terms and conditions related to your gas supply. Understanding your gas arrangements can help you make informed decisions and ensure the smooth functioning of your gas supply. Additionally, it can be beneficial to stay informed about the latest developments in the gas industry to take advantage of any potential cost-saving opportunities or improvements in service.
Are there additional charges when using an independent gas transporter?
When using an independent gas transporter (IGT) for your gas supply, there may be additional charges and fees to consider. As with any gas supply arrangement, the overall cost will depend on factors such as the volume of gas consumed, the type of tariff chosen, and the specific services provided by the IGT.
IGTs operate independently from the National Grid and major gas distribution networks, and they are responsible for the transportation of gas to businesses and homes in specific regions. As a result, there might be separate charges for the transportation and distribution of gas, in addition to the costs associated with the gas itself.
Some IGTs may charge a fixed fee for the use of their network, while others may have variable rates based on consumption. It’s important to review your billing statements and any contractual agreements with your gas supplier to understand the breakdown of these charges clearly.
To ensure transparency and consumer protection, Ofgem, the gas industry regulator, oversees IGTs’ activities. They regulate the charges and services provided by IGTs to ensure fair practices and to safeguard customers’ interests.
Before signing up with an IGT, it’s essential to review and compare pricing structures, terms, and conditions to make an informed decision that aligns with your business’s needs and budget. It’s also advisable to consult with energy suppliers and seek professional advice to explore the best options available for your gas supply requirements.
Can I switch gas suppliers when using an independent gas transporter?
You can switch gas suppliers even when using an independent gas transporter (IGT). Independent gas transporters are responsible for delivering gas to consumers’ premises, while gas suppliers are the companies that sell gas to customers. Since these are separate entities, you have the freedom to choose your gas supplier regardless of the IGT in your area.
To switch gas suppliers, you should first compare the different options available in the market to find the best deal for your business. Consider factors such as gas prices, tariffs, and customer service. Once you’ve selected a new supplier, they will handle the switch for you, liaising with the IGT and ensuring a smooth transition.
Ofgem, the gas industry regulator, oversees the switching process to ensure that customers are protected and that the switch is carried out efficiently. They have set guidelines to regulate the energy market and promote fair practices.
Switching gas suppliers can often lead to cost savings or better services, so it’s a worthwhile endeavor to explore your options regularly. It’s essential to keep in mind that your gas supply will not be affected during the switching process, and the IGT will continue to deliver gas to your premises as before.
How do I become a gas shipper?
To become a gas shipper in the UK’s gas industry, you need to follow specific steps and meet certain requirements set by Ofgem, the energy regulator. As a gas shipper, you would be responsible for selling gas to customers and managing transportation arrangements through the gas network.
First, you must obtain the necessary licenses from Ofgem to operate as a gas shipper. This involves demonstrating your financial stability and ability to comply with industry regulations. Once you have the required licenses, you can enter into contracts with gas transporters, who are responsible for physically transporting gas through the network.
As a gas shipper, you’ll need to understand the jargon and intricacies of the gas industry, including the gas transmission and distribution networks managed by companies like National Grid. You’ll also need to ensure that you have sufficient access to gas supplies and the capability to deliver gas to customers across the UK.
Being a gas shipper offers significant opportunities in the energy sector, with the potential to supply gas to homes, businesses, and other consumers. However, it also comes with responsibilities, such as accurately metering gas consumption and ensuring reliable delivery.
By complying with Ofgem’s regulations and working with reputable gas transporters, gas suppliers, and distribution network companies, you can establish yourself as a reliable gas shipper and play a vital role in the UK’s gas market.
What is a gas shipper licence?
A gas shipper license is a legal authorization issued by Ofgem, the UK’s energy regulator, that permits a company or individual to operate as a gas shipper within the gas industry. This license allows the holder, known as a gas shipper, to buy gas from producers or suppliers and sell it to customers, managing the transportation arrangements through the gas network.
To obtain a gas shipper license, applicants must meet strict criteria set by Ofgem, including demonstrating financial stability, compliance with industry regulations, and a comprehensive understanding of the gas market and jargon. The license ensures that gas shippers adhere to regulations, protect customers’ interests, and maintain the integrity of the gas supply.
As a gas shipper, one can access the national transmission system, managed by companies like National Grid, to transport gas efficiently and reliably across the UK. It also provides opportunities to operate in the competitive gas market, ensuring the delivery of gas to homes, businesses, and other consumers.
By holding a gas shipper license, companies can play a significant role in the gas industry, supporting energy suppliers, independent gas transporters, and distribution network companies. The license helps to regulate and facilitate gas transactions and guarantees a secure and efficient gas supply for the UK’s energy users.