EnergyIssues

Gas industry continues to develop

Brazilian-visit-1Following the sale of its gas supply arm to SSE plc (Airtricity) in June of this year Phoenix remains one of the most prominent continuous private sector investors in Northern Ireland.

Phoenix Natural Gas, the gas network operator, connects around 10,000 new properties to natural gas every year, and is responsible for making gas available to around half the population of Northern Ireland.

Growth

Northern Ireland was the last region in the United Kingdom and Ireland to get access to natural gas when a network build was started by Phoenix in 1996. Since then Phoenix has made gas available to around 300,000 homes and businesses and already over half of these properties have chosen to get connected.  The rapid uptake of natural gas in Northern Ireland has become a benchmark right around the world for other countries following a similar model of developing gas networks on a commercial basis.  Phoenix’s underground gas network is now over 3,100 kilometres in length and they have continued to invest around £10 million each year in development.

The company’s gas licence area includes: Belfast, Lisburn, Bangor, Newtownards, Larne, Newtownabbey, Carrickfergus, Holywood, Groomsport, Donaghadee, Millisle, Carryduff and Comber.

As well as its infrastructure business, Phoenix also continues to develop its gas services business, Phoenix Energy Services. This business specialises in asset maintenance, emergency response services and after sales care to the natural gas industry in Northern Ireland.

Ivan Bell, Phoenix Operations Director, stated: “Phoenix’s core business activity is and always will be the construction of physical assets and the distribution of gas through the network that we own.”

Whilst Phoenix’s current licence obligation is to make gas available to 81 per cent of the households in its licence area, it has already met and surpassed this target, with gas currently available to almost 90 per cent of all properties in the Greater Belfast area.

Phoenix’s success in this regard has not gone unnoticed by international experts and the company regularly hosts groups of senior gas officials from across the world who visit Belfast as part of arranged best practice visits to review the network and various other parts of Phoenix’s gas operations. The Phoenix project remains one of the most modern of its kind, built using the latest and most innovative engineering technologies.

Market development

The Phoenix Natural Gas investment and its development have been done using solely private funds. Alongside the sizeable ongoing engineering project involving network build and connections, Phoenix also has had to grow a local independent gas market workforce. From inception in 1996 the company established and developed the supply chain and skills required to grow a natural gas industry. Phoenix was able to successfully identify and secure investments from a wide range of companies to deliver product distribution, retailing, installation, design, research and development, material stocking and supply of manufacturing goods and appliances.

Alastair Pollock, Phoenix Business Development Director, reflected: “We believed that strategically the Phoenix investment would be best facilitated by empowering an indigenous local workforce.”

This decision has in turn created an independent local gas industry that today employs over 2,500 people, made up of manufacturers, retailers, gas installers, distributors, merchants and training centres.

Suppliers

Growing the network to the required level to attract competition has always been one of the key milestones in the development of the natural gas industry.  There are currently four active gas suppliers utilising Phoenix’s network to supply household and business customers. The suppliers compete across each of the customer groups with  Airtricity and  Firmus competing in both the domestic and commercial markets whilst  Energia and Vayu currently only compete in the commercial sector.
The introduction of competition in Belfast has gone particularly smoothly, with Phoenix facilitating the necessary IT systems and procedures needed to allow gas supply competition in the Greater Belfast area in 2005. 

Community

Phoenix’s award-winning integrated corporate responsibility (CR) programme, LIFE (Leadership in the marketplace, Investing in our people, Fostering our community and Environmental responsibility), has been developed to provide an overarching framework for the long-standing range of initiatives the company has in place that make a positive difference to local communities, the marketplace, the workplace and the environment.

Phoenix continues to receive national recognition for its work in this area, and recently received the ‘Big Tick’ award for CR excellence from Business In The Community. This is the eighth year in a row that Phoenix has been given this accolade, meaning that the company has more Big Tick awards than any other organisation in Northern Ireland.

phoenix-diagramGas costs

Natural gas is more environmentally friendly than most alternative fuels, it is versatile and it continues to be competitively priced.  At the time of writing Phoenix state that heating oil has been on average 24 per cent more expensive than natural gas over the past 12-months.  The Consumer Council for Northern Ireland is on record as saying their research has found that the average household customer is saving on average £1,181 per year by using natural gas compared to heating oil, with many businesses saving millions each year.

The recently published Lord Whitty Report, commissioned by the Consumer Council, highlighted the need for oil to be replaced by natural gas and for energy efficiency measures to be promoted.

Alastair Pollock said: “The Northern Ireland Executive has a target to make natural gas available to around 70 per cent of the population here, but penetration is currently only at around 20 per cent. To put this into context, in Great Britain gas is available to over 80 per cent of the population. There is no doubt that this fact and our over-dependence on oil is a huge reason for the high levels of fuel poverty in Northern Ireland.”

Future development

Phoenix is committed to continuing to invest by connecting properties in its existing licence area as well as continuing to consider other opportunities in new areas.

Ivan Bell stated: “Clearly there are many challenges ahead for Phoenix and many potential opportunities requiring investors. In terms of the level of investment in the long-term we remain confident that a more predicatable regulatory regime will emerge in the near future.  We feel that natural gas should have no social boundaries and whilst bringing gas to more areas of Northern Ireland may require government subsidy, there are a range of towns and villages that could get gas in the next two to three years if existing licence areas were to be slightly extended. In terms of future planning the question that must be considered is whether one gas distribution network operator overseeing infrastructure development instead of two would deliver further benefits to the consumer.”

Ivan Bell, Operations Director, can be contacted on 028 9055 5522 or at ivan.bell@phoenixnaturalgas.com

Alastair Pollock, Business Development Director, can be contacted on 028 9055 5599 or at alastair.pollock@phoenixnaturalgas.com

Sources:
1. Northern Ireland Assembly Research and Information Service, Fuel Poverty, NIAR 411-11, 5th September 2011.
2. Economic and Social Research Institute, Fuel Poverty in Ireland: Extent, Affected Groups and Policy Issues, Working Paper No.262, November 2008.

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