All UK Rough storage sold ahead of auction
Centrica Storage Limited (CSL), operator of the UK’s largest storage facility at Rough, says all remaining standard bundled units (SBUs) of capacity for annual contracts (2004/5) are now sold.
The sale means CSL will not have to hold an auction for any unsold capacity, which it was obliged to do by 1st April. CSL says it will publish the average prices paid for SBUs early next month as soon as the “indexed” prices are finalised.
CSL offered both fixed price and indexed contracts. The latter (normally indexed over a period of between 20 to 25 working days) are based on the differential between the market price of Summer ’04 and Q1 ’05 times a set multiplier.
CSL’s sales process was delayed by a Competition Commission enquiry into the company’s ownership of Rough, which was only settled in December. As the old five-year contracts inherited from previous owner of Rough, British Gas, terminated this gas year, all the facility’s capacity has been made available and sold since late January.
Earlier this year, some companies complained that CSL’s pricing formula for multi-year contracts meant storage space became more expensive with every additional year.
CSL’s argument was that the value of peak storage increases with time as the supply/demand balance in the UK becomes tighter. The buyers in turn argued that forward market prices indicate that the summer to Q1 spread is not widening and that should be given a discount for taking a longer period and guaranteeing cash income for CSL.
Other Related Stories
