Energy watchdog Ofgem chief warns of bill rises

 

Ofgem chief executive Alistair Buchanan is questioned over the rises

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Consumers are being warned they face higher energy bills as the UK becomes more reliant on energy imports.

The warning comes from Ofgem chief executive Alistair Buchanan, who says falls in the UK's power production capacity are likely to lead to more energy imports and price rises.

The energy watchdog predicts power station closures could mean a 10% fall in capacity by April alone.

Mr Buchanan has said the UK needs more gas supplies to fill the shortfall.

His warning comes as older power stations close and renewable energy is still growing.

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Existing plans to take ageing and polluting power stations off the UK network over the next few years mean the amount of energy the UK can produce is set to fall.

Start Quote

There isn't a single person or people to blame. In my view it was a single event - the financial crisis”

End Quote Alistair Buchanan Chief Executive, Ofgem

The BBC's John Moylan says that, while we have heard such warnings before, the difference with this one is that the process is already underway. Plants are already closing, and although planning permission for new ones is out there, nothing is actually being built.

While the shortfall in supply can be filled by increasing gas imports, competing for those supplies on the global market is likely to cost more.

Longer-term solutions to the UK's energy needs, such as new nuclear power stations or tapping domestic shale gas reserves, have yet to be given the final go-ahead by the government.

Breakdown of predicted energy suppliers

Mr Buchanan told the BBC that Britain "would be very tight on power station capacity in three to five years' time".

"We're going to have to go shopping in world markets at a time when they will be very tight [on supplies] themselves."

"There isn't a single person or people to blame. In my view it was a single event - the financial crisis. Before the financial crisis the government had backed a visionary approach to energy on wind, water and nuclear... then came the financial tsunami."

He said that crisis had a major impact on the government's ability to pay for such expensive schemes.

Plugging the gap

Mr Buchanan added that it was very important to resolve "leaky homes" and become more energy efficient in order to avoid the approaching "near crisis".

He is stepping down as Ofgem chief executive later this year.

A spokesman for the Department of Energy and Climate Change said that "we cannot afford to be complacent".

"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," he added.

Analysts said there was little chance of the UK running out of gas.

"We must not fear," said Ashton Berkhauer, the deputy chair of Energy Forecaster, which gives companies advice on their energy bills.

"The UK is very well connected. We have a number of different inter-connectors based all around the country as well as huge import facilities."

However, he added that both consumers and businesses "need to make sure they are not using more than they need to".

The chief executive of Consumer Focus, Mike O'Conner, warned that it would be those who can least afford it who would suffer the most.

"With six million households in fuel poverty, rising to over nine million by 2016, and an increasing proportion of our incomes being spent on essential items like energy, this latest news... is chilling."

Caroline Flint, Labour's shadow energy and climate change secretary, said it was important for the UK to have an energy market that "delivers fair prices and works in the public interest".

She said Labour had plans to create "a tough new energy regulator with the power to force energy companies to pass on savings to consumers".

"We must also prioritise making Britain's homes better insulated and more energy-efficient," she added.

Graph showing electricity bill and wholesale and other costs
 

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  • rate this
    +1

    Comment number 665.

    And where is Cameron in all of this? Selling our jobs to India, farming out our housing to Indian students/immegrants, giving financial aid to India to support their space industry and financing french helicopter purchases, thats where!

  • rate this
    +3

    Comment number 664.

    652.tiredallthetime

    What do you think fuels power stations, fresh air?

    Ask the crime and drug ridden ex-mining communities, riddled by unemployement if they would re-open pits.

    Modern technology makes pits safer to be than your local Tesco on a Saturday afternoon.

    "The UK consumed 51.2 million tonnes of coal in 2011, including 41.8 million tonnes in power stations. "

  • rate this
    +3

    Comment number 663.

    Invest in insulation
    Better quality buildings
    Equipment that uses less power is more efficient
    Renewable energy production
    Nuclear production where needed
    And bring the industry back into government control. It'd too important to let the private sector put profits before need!

  • rate this
    +5

    Comment number 662.

    This whole privatisation leads to just one thing MP's.

    When Govt. wanted to stop being blamed for the errors they made in trains, telephones, water, and energy they sold the lot off to companies. Now, people are swearing at the companies and not the politicians and those in the westminster bubble are laughing all the way to the bank.

  • Comment number 661.

    All this user's posts have been removed.Why?

  • rate this
    +2

    Comment number 660.

    651. Mayna
    Because NuLabor had adopted the same neo-classical economic consensus as the Tories and the Orange Book Lib-Dems who are now in coalition.
    Blair found, when he called the CEOs of the water companies to No.10 ,as they were all private companies(in most cases foreign owned too), he had no way of making them do what he wanted.
    The UK government no longer controls the UK infrastructure.

  • rate this
    +1

    Comment number 659.

    Why doesn't the UK temporarily withdraw from 2004-2008 agreements and continue using present power stations; giving time for households to improve the legacy of poor house building accepted by current/past governments. Heavily subsidizing triple (not merely double) glazing and other home insulation improvements, and support for individual solar/wind installatins would reduce energy needs.

  • rate this
    +5

    Comment number 658.

    We have masses of coal under Britain, I have heard that we have enough to last for 400 years. Why don't we go full steam to get it out by reopening or developing new mines. The employment benefits would be very useful and we could spend the intervening time, while they come on stream, to go flat out to find a way to burn it more cleanly?

  • rate this
    +3

    Comment number 657.

    652- health issues aside, you are completely wrong about what is left in coal fields in Britain- there is enough in known coal seams to power the whole of the UK for 250 years plus. We stopped because it was cheaper to import coal- it is no longer cheaper to import coal.

  • rate this
    +2

    Comment number 656.

    yesterday the Bank of England said it needs to lower the value of the pound. So if we import most of our energy and prices are going up, then a devalued pound would have catastrophic effects on the elderly and poor.

    Energy companies also post large year on year profits, maybe it's time we thought about re-privatizing.

  • rate this
    0

    Comment number 655.

    #641.NH
    43.3p per kwh"

    I wish. I suggest you check the rates.

    "in 5 years, your inverter will pack in £500"

    Uhuh. So, where are my big profits, then? I'm helping to get PV established. What are you doing to help?

  • rate this
    -3

    Comment number 654.

    With ACS DEMAND rising due to immigration causing increased UK population, I'm not surprised Mr Buchanan told the BBC that Britain "would be very tight on power station capacity in three to five years time".
    "We're going to have to go shopping ..."
    "There isn't a single person or people to blame. In my view it was a single event-the financial crisis."
    WRONG Ofgem, the people to blame R Labour!

  • rate this
    0

    Comment number 653.

    635.Bill

    Oh and bill

    I am building the network :-)
    I am a transmission line designer
    I work for national grid.
    answer that and stay fashionable :-)
    also goes some way to explaining how it is i have forgotten more about this business than you will ever know.

  • rate this
    +3

    Comment number 652.

    638, The mines were closed down as they were almost worked out and far too expensive to carry on. If people want to rework mines I would suggest that no only should they pay for them, they should also work In them too. I can't understand people who wish for others to damage their health, we need nuclear now as a massive population increase is due and we must keep the 'lights' and heating on.

  • rate this
    +1

    Comment number 651.

    646.johnno
    blame thatcher and the tories. sold off all the utilities cheap.privatisation as been a disaster
    ---
    so why didn't Labour reverse it & buy the companies back during its 13 years - or were they just glad to have the money to spend?

  • rate this
    +16

    Comment number 650.

    My husband and I (both pensioners) already this winter have gone to bed at 9.00pm to cut down on our fuel bills. Before long we won't be able to get out of bed at all - thank you Mrs T for privatising it and thank you to the Utility companies for wanting more and more profits for your shareholders. So glad we are a civilised country!!!!!!

  • rate this
    +3

    Comment number 649.

    645.Libert_arian

    Thatcher closed mines when they were more expensive, not are more expensive, there is a slight diffference. Bit like Brown selling gold reserves.

  • rate this
    +1

    Comment number 648.

    @625: This country's heading down the pan

    After 30 years or so you'd think we'd be there by now... big pan then!

  • Comment number 647.

    All this user's posts have been removed.Why?

  • rate this
    -1

    Comment number 646.

    blame thatcher and the tories. sold off all the utilities cheap.privatisation as been a disaster

 

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