The undertakings were first given by Centrica Storage Ltd (CSL) and Centrica plc (Centrica) following a Competition Commission report into Centrica’s acquisition in 2002 of the facility. 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. It is an important part of the UK’s gas storage infrastructure and capacity.
The undertakings include a requirement to keep CSL, the operator of Rough, legally, financially and physically separate from its parent company Centrica, and to prevent CSL from discriminating in favour of Centrica or other users of Rough. The undertakings also include an obligation for CSL to sell a specific amount of capacity before the start of each storage year and restrict the amount which can be supplied to Centrica.
CSL suggests that, as an ageing asset, Rough’s performance is more likely to vary in the future, increasing the chance that it may not meet its sales obligations. CSL has asked the Competition and Markets Authority (CMA) to vary the undertakings to allow for Rough’s changing physical capabilities.
Given CSL’s request, the CMA is inviting comments in writing by 12 October 2015 from any interested parties on whether to review the Rough undertakings. Further details can be found on the consultation page.
Notes for editors
The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law.
The Rough undertakings were accepted by the Secretary of State under section 88 of the Fair Trading Act 1973. By virtue of paragraph 16 of Schedule 24 to the Enterprise Act 2002, and The Enterprise Act 2002 (Enforcement Undertakings and Orders) Order 2004 (SI 2004/2181), the CMA has the ability to supersede, vary or release certain undertakings accepted under the Fair Trading Act 1973; this includes the Rough undertakings. This power is exercisable in the same circumstances, and on the same terms and conditions as applied to the Secretary of State under the Fair Trading Act 1973; namely that by reason of any change of circumstances the undertakings are no longer appropriate and need to be varied, superseded or released.
The Rough undertakings were first given by Centrica Storage Ltd and Centrica plc following Centrica plc’s acquisition in 2002 of the Rough gas storage facility and have been subsequently amended following Competition Commission reviews in 2006 and 2011.
Separately, CSL has also sought an indication from the CMA that it will not take enforcement action if CSL is unable to meet its capacity obligations for 2016/17 because it has reduced pressure while it conducts tests to address concerns about well integrity. The CMA has today said that based on the information it has received so far, it would be unlikely to prioritise such action. See the consultation page for further information.