Ofgem warning over UK power shortages
Ofgem warning over UK power shortages
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Wednesday, 03, Feb 2010 11:56
By Sarah Garrod.
Energy regulator Ofgem has raised concerns over whether current energy supplies in Britain can be sustained.
The regulator said the unprecedented combination of the global financial crisis, tough environmental targets, increasing gas import dependency and the closure of ageing power stations has "combined to cast reasonable doubt over whether the current energy arrangements will deliver secure and sustainable energy supplies".
In its Project Discovery conclusions, Ofgem said only prompt action will ensure that consumers do not pay more than is necessary and allow time for a wider range of reforms to be considered.
Ofgem's chief executive, Alistair Buchanan, said: "We do not advocate change lightly, but all the facts point to the need for reforms now to provide resilient supply security. Acting earlier will also help keep costs as low as possible for consumers and business.
"The overwhelming majority of responses to Ofgem's October consultation show that there is an increasing consensus that leaving the present system of market arrangements and other incentives unchanged is not an option. Ofgem has therefore put forward a range of possible options to unlock the up to £200 billion of investment Britain may need. We are keen to work with government to find the best way forward."
But the government has said it is "confident" it will rise to the energy supply challenge.
In a response to the Ofgem report, energy and climate change secretary Ed Miliband said: "Our Low Carbon Transition Plan has put in place a programme of action to deliver secure and increasingly low carbon energy supplies in the medium term through to 2020.
"However, for the longer term, Britain will need a more interventionist energy policy. The scale and upfront nature of the low carbon investment needed is likely to require significant reform of our market arrangements to deliver security of supply in the most affordable way.
"That is why my department began work last summer to plot out the pathways to a decarbonised, secure energy mix in 2050 and the options for reforming the market to deliver it. Ofgem's report will contribute to the proposals we will make at the time of the Budget."
In a separate report out on Wednesday uSwitch.com said it had concerns following Scottish and Southern Energy's interim management statement that households were cutting down on their energy usage during the cold weather to save money.
Ann Robinson, director of consumer policy at uSwitch.com, commented: "This is clear evidence that the high cost of energy is starting to take its toll. During the bitterest winter we've seen for years households were using less energy instead of more.
"Energy companies are enjoying a bumper year of low wholesale prices - conditions are ripe for a price cut and we would urge suppliers to act now so that consumers can enjoy the benefit this winter when it really counts."