UK industrial gas prices up 20 pct on climate levy

The government imposed the levy of 0.15 pence a kilowatt hour (kWh) on gas used by industrial consumers as a part of its strategy to cut the emissions which many scientists say are a major contributor to global warming. \"Underlying gas prices have remained at the high levels reached last year,\" said NUS Consulting in a report on European natural gas prices. According to the consultants, UK industrial gas prices rose by around 20 percent to just over one pence/kWh but even with the increase were still among the lowest in Europe. UK prices have doubled over the last two years, partly because the opening of the UK/Belgium interconector pipeline linked British prices to European gas prices which are indexed to oil prices. British prices are likely to stay around present levels for the next few years because of the link with oil prices and also the UK gas sector is less competitive than it used to be, said the report. \"A market that had once been so fiercely competitive is now more stable and we are unlikely to see gas prices at 1999 levels again,\" said the report. \"The market...has matured into one of limited choice for industrial and commercial consumer. It is increasingly rare for a supplier to price aggressively in order to gain new business,\" it added. Domestic customers were not initially affected by the surge in wholesale prices but household tariffs went up by around five percent last year and by a similar amount again at the start of this year. Gas demand in Britain has doubled over the last 10 years. Industrial, commercial and domestic use has risen 16 percent but usage in power generation has grown from virtually nil in 1990 to around 30 percent last year. REUTERS NEWS SERVICE