What happens if the lights go out?
Britain’s energy regulator issued the first of its annual Electricity Capacity Assessments. Its conclusions could have wide-ranging impacts on energy prices and has provoked rumours of potential black outs in 2015.
Ofgem expects some coal-fired power stations will have to stop generating electricity because of long-standing environmental legislation. The power stations are deemed too environmentally damaging to keep operating and may have to be closed before the winter of 2015-16.
This means that the amount of spare electricity capacity in the network to keep your kettle boiling could dip from a comfortable 14% to a much more risky 4% in three years time. The risk of power cuts then becomes much greater.
Risk of power cuts
Power cuts and possible price hikes – sounds like something needs to be done. In fact, the issue of electricity capacity has been on the political agenda for some time. And in May the government published a Draft Energy Bill to deal with this (the full legislation will be published later this year).
The Energy Bill will aim to address the issue of a shortfall in electricity, the idea being that it will put in place mechanisms to secure the billions of pounds worth of investment that we need for new power generation like wind farms and nuclear power plants.
Ofgem also urged the government to make a decision on what is known as a capacity mechanism which is basically a way of ensuring a certain amount of capacity is available. Of course that’s all essential if we want to keep the lights on but who foots the bill for that investment? You guessed it, we, the consumer are picking up the tab.
Affordable energy for everyone
We want to see the government put affordability for the consumer at the heart of the reforms to the energy market. If you’re already struggling to pay your bills you cannot be expected to stump up endless amounts of cash. We will be pressing the government to make sure affordability is high on the agenda in the Energy Bill.
Domestic energy bills have been on the up in recent years and that’s unlikely to change in the near future. This is partly due to the need for investment in new power generation. And even if we don’t make this investment, prices are likely to go up due to our reliance on gas generated abroad.
Time and again you’ve told us that rising prices for gas and electricity are one of your major concerns so we want to make sure that no further strain is put onto household budgets this way. Do you think the government is doing enough to make sure we have an affordable energy system?
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