Financial News
- 20 February 2013, 2:21
Energy Bills 'Set To Rise' Ofgem Warns
Britain's fossil fuel energy supplies are on a rollercoaster and heading downhill fast, according to the head of industry regulator Ofgem.
Chief executive Alistair Buchanan issued the stark warning to consumers and businesses to prepare for higher prices as power plants close, foreign gas supplies shrink and increasing demand tightens the British energy market.
Mr Buchanan, writing in The Daily Telegraph, said: "We have to face the likelihood that avoiding power shortages will also carry a price.
"If you can imagine a ride on a rollercoaster at a fairground, then this winter we are at the top of the circuit and we head downhill - fast.
"Within three years we will see reserve margin of generation fall from below 14% to below 5% - that is uncomfortably tight."
Mr Buchanan also said that in addition to no new nuclear or clean coal capacity increase, there would be no new "carbon capture" before 2020.
As a result, gas will increase as an energy source for power stations - from 30% now up to a possible 70% in the next seven years.
But he said Ofgem would not let companies take advantage of consumers.
"Just when we need more gas, world demand for gas is set to rise while our own supplies are predicted to fall by another 25% by 2020," Mr Buchanan explained.
The Government said it was acting to prevent any possible "looming energy gap".
But a spokesman for the Department of Energy and Climate Change (DECC) said: "Our energy system faces significant challenges over coming years, including the closure of around one-fifth of our ageing power stations.
"So as Ofgem highlights, we cannot afford to be complacent and may face a looming energy gap.
"The reforms we are making to the electricity market through the Energy Bill and through our gas generation strategy are aimed at plugging this gap in order to keep the lights on.
The DECC spokesman added: "We have legislated to introduce a capacity market that will help guard against blackouts and ensure there is sufficient supply when margins get tight.
"We are opening up the electricity market to incentivise a record £110bn of private sector investment in new clean power generation - in renewables, new gas, nuclear and carbon capture and storage.
"We can't put all our eggs in one basket, we need a diverse energy mix - this is the best solution to guard against high price of wholesale gas which drives up consumer bills."
what do you think?
David Francis
Won't be long before I might aswell get my employer to hand my salary straight over to my gas provider!
davenlesley
David. Blame successive govts and their short sighted energy policies
David Francis
DnL - well aware of that m8 - see my later comment.
john
I am old enough to remember when the men from the Gas Board came to replace the burners on my mothers cooker so they would be suitable for north sea gas. Prior to this Great Britain used coal gas and the coke by product went to power stations to provide our electricity, we were self sufficent and didn't rely on foreigners for our power needs. Simple minded self-serving politicians have slowly ruined this country with their short sighted policies. An island sitting on billions of tons of coal relying on energy imports is insanity.
Mikel roi
Yes John absolutely right. But the largely unqualified "green" religion has been allowed so much say in our energy policy, it has stalled for nearly 2 decades. Hence the fix we are in and now. But not to worry, we now have all those over priced wind farms, they should be able to see us through the bitterly cold spells, surely? In your dreams folks!
Mark Ashpole
Go nuclear and this wont be a problem.simple.
davenlesley
Mark. You are right but we have wasted so much time pandering to the green lobby stations won't be ready on time.
GillieLouise
Absolutely correct Mark and as Dave as pointed out we have wasted so much time creeping around the greens. Nuclear is the only way to go.
Andy Sillitoe
I thought mr turpin said money or your life that's what these robbing company's should say as there advertising slogans
David Wragg
The real culprits are successive governments that have failed to provide for new power stations to be built, and instead of choosing the nuclear option have splashed out OUR money on subsidies for useless and unreliable wind farms, even inflating our electricity bills in the process! Unless shale gas and fracking is all it is cracked up to be, we are finished.
Mikel roi
Not entirely finished, there are new technologies coming up that do not rely on shale gas. If only we could curb the misinformation of the environmental lobbyists, we could soon revisit our massive coal reserves with new technology that extracts the energy without so much smoke. If we had spent more on nuclear fusion (which has been known about for decades) instead of nuclear weapons posturing, we might now have (in OXFORD) a working fusion power plant!
David Francis
Another aspect of this situation is that a significant proportion of the price rises in the last 7 to 10 years have been tax and green subsidy charges. Now the cost of the raw materials is to rise we will inevitably suffer a double dose of inflation in power costs. all because of the governments stupid decision to achieve higher than required carbon emmission savings!. This has already reduced the brick industry in the UK by a huge amount. This results in imports and additional carbon costs on the transportation of the bricks thus effectively cancelling out any savings intended. Stupidy, pure stupidity.
davenlesley
Very true. I well remember Brown telling us that the UK was not going to follow as regards carbon emissions reduction we were to be a leader. So he set high targets than even the stupid EU demanded. This current lot of clowns have merely followed suit.
shirley sutton
Results of killing our own coal industry so we can be held to random by rest of the world
George Clement
There was the technology already there for clean coal power stations but the loony Tories under Thatcher were intent on smashing the mining industry and the mining communities and in turn smash the unions. There was no money in it for the Tories and their backers to push for coal, they made more in their dash for gas and as far as prices go we've been held to ransom ever since.
Eric Clutterbean
gas coming from russia? to warm the millions of immigrants unemployed as industry will be gone sitting on 500 years of coal in the ground pensioners freezing to death china and india sitting snug around their coal power staions on well cheer up
davenlesley
Eric. Gas from Russia now but for how long. To allow our energy supplies to be controlled by a country as corrupt & unstable as Russia was negligence of the highest order by successive govts. We are in their pockets,.One turn of the tap and chaos
Paul Grice
This is the cost of keeping the tree huggers happy GREEN ENERGY. LOW CARBON EMISSION. CLIMATE CHANGE. All designed to pick your pocket CLIMATE CHANGE DOES NOT EXIST ITS A CON NOTHING HAPPENING TODAY AS NOT HAPPENED BEFORE. It's all about the money
davenlesley
Thats what we get for stupid politicians falling over themselves to demonstrate their green credentials and listening to all the global warming scaremongers. We are sitting on an island of coal but aren't allowed to burn it. We led the world with nuclear fission but treat nuclear energy as a pariah. Those who suggested nuclear or fossil fuel generated energy was the way forward were villified. More windmills, more renewables was the cry,well you wanted it now live with the consequences
blue side
Dave there are too many vested interests - coal can be clean but no we want wind farms which are a blight and have finite life. Government turned down a grant for a proven technology that is a closed loop burner but funded a wind turbine project - now I wonder who is getting a free holiday?
Brian Holmes
Thatcher closed the coal industry and the coalgas industry so now we have to import very substandard Polish coal. I still have an open fire and struggled all winter to get the damned stuff to light!
blue side
Enough is enough - we are being held to ransom
Mikel roi
What do you mean enough? You aint seen nothing yet mate - worse to come!
field_pete
Do we need an appointment to bend over and have the broom handle inserted?
John Andrew
amazing oh dooooomed need to tax everyone for green energy ,etc etc oh and do not forget the millions wasted on the next to useless Windfarms that blot the landscape,go nuclear,as for Ofgem and Ofwat and what ever off ,they are as useless as what i can not mention and are in the pockets of all these lot same a sWho are in the pockets of the pharma companies,look at oil for past 6 months its been at $100 a tin not $150 so prices kept inflated for guess what ,time for a national strike me thinks
Ben
Remind me again who was in charge of keeping an eye on the energy sector when Labour were in charge.....
davenlesley
Ben. I think it is a tad unfair to lay all the blame for this at Labours door. They were however too easily taken in by the Global warming myth and embraced renewable energy as a solution far too enthusiastically. The 2 main parties vied with each other to show how green they were all for a few votes. This shambles is the result.
Brian Holmes
Years of giving away our national assets, willingly relinquishing our superiority in many industries and prostrating ourselves across Europe to prove our credentials are now paying their dividends. The actions and inactions of successive Ministers in many of our past governments have compromised us and made us very vunerable. Lions led by donkeys.
alan todd
Who is to blame? THATCHER she killed the gas boards,electricty board, and the Coalboard.She denationalised all of these to give her friends and tories more money by buying shares in the new companies that took over from these boards.If theses companies paid out less in dividends then we would not have to pay through the nose for gas and electricity.The solution is simple--Nationalise gas and electricty and open new coal mines .I know some will shout that is a waste of money but there are millions of tons of coal still left underground in this country.It will also create jobs that we are short of.
David Francis
Alan - I disagree with your reason for her motives. I remember the 70's (started work in 78) and the unions had a really pernicious grip on UK Industry and were responsible for many lost jobs. I'm not saying that unions do not have their place but back then they were out of control. Thatcher 'Unnationalised' all of these institutions so that they could start to function properly again. What we are seeing now are the unintended consequences of her actions. Strange how the French unions are causing similar bad relations at Goodyear now - this is what happens when you allow them to go to far.
Mikel roi
Whoa up there, I might dislike the Grantham Witch as much as you, but it is the EU that has driven privatisation of public services and that is at this time forcing the privatisation of the NHS and the Fire services. The guiding principle is contained in this simple statement, "EU state aid rules apply to public monies granted to other organisations, as it has the potential to distort the market". You see? They believe that publicly funded services "distort" the EU area market! Blame the right guys & gals, not just one of them. Vote UKIP next time and we will send a message to the top they cannot ignore.
Mikel roi
Well, there is a surprise! We start shutting all our cola fired power stations down and investing in inefficient wind energy (see this report: <a href="http://www.civitas.org.uk/economy/electricitycosts2012.pdf)" rel='nofollow'>http://www.civitas.org.uk/economy/electricitycosts2012.pdf)</a> instead of grasping the nettle 15 years ago and building the nuclear power we are now going to need and haven't got! There was no easy and perfect way to meet the demand and if we continue to have bitterly cold Winters, we will all regret the lobbyists who have held up the only viable medium term solution, other than keeping coal fired stations running. All that has happened is that we still need nuclear but the costs have risen dramatically and we have spent billions on pre-building costs and wind farms that cannot provide consistent power of sufficient quantity when we need it. So we must just cut back all we can and pay more.
James Dalby
What about hydrogen fuel?
Phil A
10:28am on 19/2/2013
Another press release from the Ministry of the Bleeding Obvious?