Watchdog warns of energy bill rises

Written By Unknown on Selasa, 19 Februari 2013 | 19.21

19 February 2013 Last updated at 07:17 ET
Alistair Buchanan

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Alistair Buchanan: "We will be very tight on power station capacity in three to five years' time"

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

In a speech, Ofgem chief executive Alistair Buchanan will say that falls in Britain's power production capacity are likely to lead to more energy imports and customers paying more.

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.

Global market

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.

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.

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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

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.

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 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.

'Don't panic'

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".

Gas hob

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

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".

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.


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