National Grid Gas (NGG) owns four Liquefied Natural Gas (LNG) storage facilities. The facilities are partially deregulated providing commercial storage services to gas shippers. But the price of the reserve services they provide to National Grid in its role as Transmission System Operator (TSO) and to provide gas to certain areas of Scotland not connected to the main network are still regulated. Ofgem's aim is to fully deregulate the LNG business but to do this NGG needs to establish effective competition in the provision of reserve services to the TSO. A clear timetable has been set out for establishing competition but it will be necessary to continue to impose price caps in the transition period.
Ofgem has conducted a consultation process on the appropriate regulatory arrangements for these LNG storage facilities during the latter half of 2007, and has now Directed the license changes that are required to implement the Final Proposals.