UK energy supplies on a downward slope
Published on 19 February 2013 11:30 AM
Concerns have been raised over the UK's energy supplies, with fears that dwindling stock could bump up bills nationwide.
Industry regulator Ofgem has warned that supplies are currently on a 'rollercoaster' and heading 'downhill fast'.
Alistair Buchanan, Ofgem chief executive, claimed that consumers, as well as businesses, should prepare for higher prices at a time when an increasing number of older people are being plunged into fuel poverty.
He warned that the British energy market would become tighter as a result of power plants closing, foreign gas supplies shrinking and increasing demand.
'We have to face the likelihood that avoiding power shortages will also carry a price,' Mr Buchanan said, writing in the Daily Telegraph.
'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.'
Ofgem predicts that within three years the reserve margin of generation will fall dramatically from below 14% to below 5%.
As is stands, about 10% of current generation stock is set to go next month due to coal and oil-fired power stations closing earlier than expected to meet environmental targets.
Elsewhere, world demand for gas is poised to tighten as expected gas supplies from the Russian Shtokman field are cancelled, China's demand rises by 20% annually and Asian gas shoots up in price to 60% more than UK supplies.
Ofgem 'would not let companies take advantage of consumers'
Despite the growing pressures, Mr Buchanan told the BBC that Ofgem would not let companies take advantage of consumers.
'I am very encouraged by what the industry is doing - they are paying their fines for behaving badly, they've stopped mis-selling, they are carrying forward a lot of retail market reforms,' he said.
'So, for the consumer the issue is 'Are the companies taking advantage of a high-price environment?' And we will ensure they don't do that on behalf of consumers.'
Meanwhile, the Government said it was acting to prevent any possible 'looming energy gap'.
Exploring options for UK shale gas reserves has been touted as a possible measure to help energy security and focus on the affordability of energy to households, although it is yet to be seen what will come of this as opponents say it does not offer a viable long-term solution to the country's energy needs.
Copyright Press Association 2013