INDUSTRY leaders, businesses and politicians in the Tees Valley are warning the Government that proposed changes to the UK gas transmission charging system with hit jobs and investment.

Ofgem has confirmed plans to change its charging policy – including its "shorthaul tariff" – which is based on how far gas must travel and currently benefits the Tees Valley as companies pay less because of their proximity to the North Sea.

The tariff is set to be removed on October 1 to comply with new EU regulations.

Teesside businesses, including CF Fertilisers, Lucite International and Sembcorp, have warned it will cost millions each year and will impact their ability to remain competitive.

Leaders say the removal of the tariff will also add to the pressures many are already facing as a result of Brexit uncertainties and the covid-19 crisis.

David Hopkins, managing director of CF Fertilisers, said: “Ofgem’s proposed new charging structure will impose unfair and highly detrimental new costs on our Teesside facility, as well as other businesses in the region.

"Without a replacement for the current shorthaul tariff, which is based on the fact that our business only uses a few kilometres of the national pipeline, Ofgem’s proposal will expose our Billingham site and others to a 25-fold increase in gas transmission charges."

“We are currently operating in a very challenging economic climate. As we seek to re-emerge safely from this crisis, it is vital that Ofgem works with government and industry to find a constructive solution to this issue quickly before the damaging new charging regime is implemented to the detriment of the Tees Valley economy."

Alex Cunningham, Stockton North MP, said: “This is not protecting the interests of a significant tranche of gas consumers in the north east of England – firms that make a substantial contribution to the national and regional economy in terms of the export value of the products they make.

“Driving through this change to meet EU regulations after we have left the EU, is illogical, especially given the severity of the regional impact for key manufacturing industry.

"It is an investment that regional industry shouldn’t need to make, cannot afford and that doesn’t benefit anyone – including the domestic consumer, to meet legislative deadline that doesn’t even apply post Brexit.”

Phil Bailey, general manager (EAME Region) for Lucite International, said: “As one of Teesside’s key chemical industry employers, the changes being proposed to the charging scheme will have a detrimental impact on the global cost competitiveness of our operations and are being implemented at a very unhelpful time.

"This change comes when we, like many other businesses in the country, are already facing unprecedented external challenges which are having a significant negative impact on our financial position and bringing real uncertainty.

"As the manufacturer of the raw material for Perspex, the material of choice for the application for virus protection screens, we are doing what we can to help in the fight against Covid-19 and it is difficult to understand, when many other businesses and individuals are being financially supported through this very difficult period, how we are facing what would be a very damaging potential increase in our costs.

Tees Valley Mayor Ben Houchen said: “This EU regulation is exactly why we needed to leave the European Union – and why the vast majority of people across Teesside, Darlington and Hartlepool backed that decision in 2016.

“These unelected bureaucrats in Brussels pass laws we have no say on, which could be extremely damaging to Teesside industry, right at the time when we are looking to unleash the potential of the South Tees Development Corporation site, which will become the centre of UK clean growth and one of the biggest regeneration projects in Europe.

“The Government has been fully supportive of Net Zero Teesside, which will see the creation of the world’s first full-scale Carbon Capture, Utilisation and Storage Facility, creating thousands of direct jobs, so I’ll be calling on the Government to remove this unnecessary and damaging regulation on the 1st of January when we are completely - and finally - free from European control.”