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Energy regulator warns of price 'rollercoaster'

Simon Ward
by Lovemoney Staff Simon Ward on 19 February 2013  |  Comments 5 comments

The chief executive of Ofgem says that supply shortages and rising demand for gas will lead to bills continuing to rise.

Energy regulator warns of price 'rollercoaster'

The chief executive of the energy regulator Ofgem has warned that UK energy supplies are on a “rollercoaster” and prices are likely to continue rising.

Writing in the Daily Telegraph, Alistair Buchanan described Britain’s energy reserves as “uncomfortably tight”.

He writes: “If you can imagine a ride on a roller-coaster 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 the reserve margin of generation fall from about 14% to less than 5%.”

He says that Ofgem predicts gas supplies will need to be double by 2020 to fill the gap left by the closure of coal and oil power stations, to meet Government environmental targets, and the lack of other viable alternatives.

But this gas is likely to be more expensive and in higher demand from other countries. He also forecasts that shale gas – obtained by hydraulic fracturing, or fracking – isn’t likely to be available in sufficient quantities to plug the gap.

“We have to face the likelihood that avoiding power shortages will come at a price,” he concludes.

Saga estimates that the average household’s weekly expenditure on energy nearly doubled from £13.50 in 2005 to £26.03 in 2012.

The cost of investment in green energy is also likely to push the average energy bill up by £95 a year, according to Government figures.

The Government is hoping its recently-launched Green Deal, offering loans to fund energy efficiency improvements which are repaid via a household's energy bills, will lead to a drop in energy consumption.

For tips on getting a cheaper tariff, read How to pay 2011 energy prices! and for advice on saving energy around the home, take a look at Ten ways to save on energy.

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Comments (5)

  • Clive_Windsor
    Love rating 53
    Clive_Windsor said

    "The cost of investment in green energy is also likely to push the average energy bill up by £95 a year, according to Government figures."....welcome to reality and why are our coal and oil power stations being pulled from under our feet (coal currently supplying around 45% of demand) ? Yes indeed, more green voodoo policy.

    So the price rises are all being caused by "green" eco-madness and subsidising worthless renewable energy such as wind and solar. Our only hope now is some fast fracking for our Bowland shale gas..

    When will the UK government realise that they are here for the majority of the British people not the minority green activists or to give away our money in foreign aid.

    Report on 19 February 2013  |  Love thisLove  0 loves
  • easygoing
    Love rating 170
    easygoing said

    This is of course the result of successive governments putting off the big decisions about our future power generation added of course the general lack of realism about our need to consider nuclear power. It was a case of fingers crossed and hope something turns up. So we all end up paying for their procrastination. When the lights go out people will start wringing their saying someone should have done something - except that the lights won't go out will they? It was revealed today that industry will be prevailed to shut down during periods of excess demand. Back to the three day week.

    You cannot blame governments for exploring green alternatives seeing that nuclear was too sensitive and it seems that Clive Windsor is a global warming denier. Interesting observation I heard the other day, global warming started when man started farming animals for food!

    Where are the honest courageous leaders when we need them?

    Report on 19 February 2013  |  Love thisLove  0 loves
  • oldhenry
    Love rating 343
    oldhenry said

    Clive Windsor is dead right. You do not have to be a climate chnage denier to see what ineptitude our governments have. China opens a new coal fired power station every week. The Indians still open new coal fired power stations and we buy goods from these countries made by 'dirty ' power. I bet the green lobby all use electronic kit made using coal fired electricty. Or do they have a wind up mobile phone?

    So the climate will be fouled up by other countries so why do we torture ourselves in this way? Do we have a death wish or feel that we are so important that the UK giving up coal will make the life on the planet last another 2 or 3 billion years? The earth life will end when the sun packs up but before then life will be pretty unsustainable as the population will be killing each other over the last few resources available. That is why the US are desperately looking for life on another planet so they can foul that one up before the silly green lobby gets there and gets the EU to ban normal life for millions.

    Report on 19 February 2013  |  Love thisLove  1 love
  • Aitken B
    Love rating 146
    Aitken B said

    This is a problem made in Westminster and Brussels by people who listen to the doom mongering greenies.

    Is the globe getting warmer - probably

    Is man the cause - possibly but only to an immeasurably small degree

    Can man stop any planet warming that is happening - absolutely not

    Yet our idiots in the Westminster village (I thought villages only had one idiot) continue to push up the price of our energy chasing a "pie in the sky" goal of reducing CO2 in the sure and certain faith (faith being the belief in something despite lack of evidence or even in the face of contrary evidence) that that will reverse any global warming that does exist.

    Some simple maths for you.

    CO2 in our atmosphere is at about 400 PPM (Parts per Million)

    4% of Global CO2 is generated by man = 16ppm

    2% of that 4% comes from the UK = 0.32ppm

    UK target is to reduce our CO2 production by 50% = 0.16ppm

    Easy calculations will tell you that the industrial qualities of cash extorted from energy users in the UK to reduce our production by 50% (i.e. 1% of man's global production) will bring that 400ppm crashing down to a staggering 399.84ppm a reduction of 0.16ppm. And for that we will have destroyed any competitiveness we could have achieved and with it our economy. We will be back to being a very poor 3rd world 4th rate country. And remember that every time a volcano farts it pushes out more CO2 in minutes than is produced by man in years.

    If we ignore the doom sayers we could start again to use our coal reserves. Yes we should scrub the nasties out of the exhaust but that does not include CO2 which, contrary to what the doomsters would have you believe, is not a pollutant but a gas necessary to life on our planet. In fact, a bit more CO2 would help us. Proxy data has told us that in times gone by there was much more CO2 in the atmosphere and at these times the plant growth was much stronger and made life quite a bit easier.

    As for shale gas reserves not being large, from what I remember that's not what the industry says.

    One problem I think we do need to face is the rate of population growth. However I'm confident our wonderful rulers in Brussels will arrive at the right solution for that; once every other possible option has been tried at great expense to us and huge profit to them.

    Cynical? Moi? Non!

    Report on 19 February 2013  |  Love thisLove  0 loves
  • charles125
    Love rating 53
    charles125 said

    Good that at least some people are on the right wavelength. You can have sustainable wood burning power stations that filter the emissions making them practically clean, at a fraction of the cost of nuclear power stations, so why don't we? Our gas reserves of just 14 days makes bargaining useless. The French have about 140 days reserves so they can hold out for much better prices and bargain much more substantially to get cheaper gas. Wind turbines have a huge amount of expensive copper and very highly expensive electronic control systems. They don't work in cold windless conditions and have to be turned off when it is stormy and we need more energy! it is also highly debatable that over their working lifetimes, whether they will in fact generate enough energy to cover the cost of fabricating, transporting, erecting and maintaining them including the cost of new access roads or of helicopters or shipping for sea sited ones, let alone generate any surplus energy!!!! If every available field was turned over to biomass plants, every available roof had solar panels and every available site fitted with wind turbines, this would in total generate just between 5% and 10% of our energy needs. And heaven help any hikers or sailors or shipwrecks needing helicopter assistance anywhere near these wind farms in poor visibility conditions, it simply won't happen. The Severn barrage if built will equal the entire possible green energy sources! So in simple plain English, all this green talk nonsense is a load of bull. Scotland could generate most of our power needs if they only invested properly in hydro-electric schemes. And laser fusion power stations are likely to be commercially viable within about 15 years. They expect these to generate more power than they intake by sometime this year. But do our leaders recognize any of this? No! Do they wish to invest more in this extremely promising laser fusion research? not a chance. If Parliament was run by Chimps they might have more of a clue!!!!

    Report on 21 February 2013  |  Love thisLove  0 loves

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