FIVE major industrial companies on Teesside have warned they may be forced to bypass the national gas transmission system amid “crippling” new charges.

Ofgem is due to introduce a new gas charging system today.

Businesses on Teesside have previously warned the changes could have a devastating impact on industry in the region, which previously benefitted from a short haul tariff because of its proximity to the North Sea.

Huntsman Polyurethanes, CF Fertilisers, international gases group BOC, global acrylics leader Lucite International and integrated energy provider Sembcorp Energy UK have written to Kwasi Kwarteng, the UK minister for business, energy and clean growth to warn that the changes will cause serious damage.

They are predicting that the new charges for transmission will cost them a combined total of £30 million a year.

Philip Aldridge, chief executive of NEPIC, which represents the North-East chemical-processing sector said: “The new charging structure is absolutely crippling to some of the biggest employers in the UK’s leading manufacturing area and risks serious damage to the competitiveness of their businesses and operations, as well as the future of people employed in the hundreds of firms that supply them.”

It adds: "Far from creating jobs in northern towns and cities, these changes may achieve the opposite of what this government stands by and directly impacts industrial clusters in the north of England and their supply chains that collectively employ tens of thousands of people.

"Furthermore, changes will add to the significant financial challenges already faced by industry including trade tariff and greenhouse gas regime uncertainty, compliance with EU waste incineration, wastewater directives and plastic packaging tax.

"The impact of the changes on key industries is especially difficult at a time when the UK’s supply chains are facing significant operational challenges related to the Covid-19 pandemic."

NEPIC argues Ofgem did not carry out impact assessments on the industries directly affected by the charging changes – and says the regulator’s “inaction” to stand by its commitment to industry to make swift decisions that would afford the affected companies the time needed to look at mitigation options is “unacceptable”.

The letter to Mr Kwarteng states: “As a significant chemical producing region, we ask that you make urgent representations to Ofgem on the introduction of a replacement for short haul to keep affected energy intensive industries on Teesside, and in the UK, on the national gas grid.

"As a minimum, we request your support in seeking early certainty to modifications to allow vital businesses in the region to work towards mitigating the significant impact of a potential new gas transmission charging system.”

Stockton North MP Alex Cunningham has also written the minister calling for a review of Ofgem, saying the body had mishandled the tariff changes.

He said: “We all recognise the independent status of Ofgem, but where their actions will have such catastrophic effects, it is critical that they are held to account in as robust a way as possible."

An Ofgem spokesman said: “We considered the impact of our gas charging decision on all types of energy consumers, including industrial and commercial users.

"The overall the change will deliver benefits to consumers of over £3 billion over the next ten years.”