Paper body reacts angrily to gas claims

The paper industry has reacted angrily to government claims that they are in some way responsible for the massive gas price increases currently afflicting them.

Intensive energy users were partly blamed for price rises that are costing the industry millions of pounds for “choosing” to buy gas on the spot market.

The Confederation of Paper Industries (CPI) head of environment David Gillett said: “If the Government was correct in saying that industries such as ours are choosing to buy spot prices then we would agree there is nothing Government can do to help us. But it isn’t correct. The industry is buying spot because forward prices went through the roof. Our members have had no choice.”

Wholesale gas prices have risen from 31p per therm at the start of November to £1.70 per therm in the last week. With a 1p per therm increase costing the papermaking industry £6 million, these rises have had a huge impact on its ability to compete.

The major concern for the industry is being able to operate through the current winter if gas prices do not fall to a more sustainable level.

Gillett added: “The market, as the minister has now recognised, is not working correctly and this is an issue with which Government should involve itself.”

The Department of Trade and Industry has noted a number of concerns such as the need to maximise north sea gas production and imports and the need for new storage methods.

They also suggested making unused capacity available and liberalising energy markets in Europe with increased transparency and quality of information for purchasers.

“The energy minister stated that what is happening to spot prices is irrational. We agree, and have been telling the Government that gas prices have been irrational for the past eighteen months”, said Gillett.

The CPI is part of the Energy Intensive Users Group which has been involved in a joint working group set up by the previous secretary of state to review UK energy markets and prices.