SHANNON LNG has initiated a High Court action against the decision of the Commission for Energy Regulation (CER) to impose a tariff on the company to help pay for a gas pipeline to the UK that it will never use.
The company is challenging the State, the Attorney General and the CER with a judicial review before the High Court this week. This follows the publication in July of the CER's decision to impose tariffs on the company that could be as high as €50 million a year. LNG says the cost is prohibitive and could force the company to abandon the project.
Locals were deeply angered by the decision of the regulator in July. Shannon LNG's gas plant on the Ballylongford landbank would involve an investment of €500 million, creating hundreds of local jobs for the duration of its four-year build.
The company was all but ready to make its final investment when CER indicated a new shake-up to the structure of the gas industry in the country; providing for tarrifs for all gas players in the Irish market to pay for the upkeep of pipelines between the UK and the Ireland.
Bord Gáis is the sole user of the pipelines and a prospective competitor of Shannon LNG's. Shannon LNG, however, would never use the pipeline, instead planning to import gas to the deep-water facility it is hoping to build on the landbank. The company argues the requirement to pay tariffs for the construction and upkeep of major gas pipelines is anti-competitive and has already referred the matter to the EU.
The CER, however, believes gas prices would rise if Bord Gáis were forced to carry the entire cost of the pipelines and say it is protecting the Irish consumer by imposing tarrifs on all gas players here.
Neither the Department of Energy nor Hess LNG - Shannon LNG's parent company - would comment on the High Court action as it is now underway. This week's action could result in a hearing at the Commercial Court next year. The action is likely to be taken on the grounds that the CER decision is not in keeping with EU competition law.