Feb 19 2013
Energy supplies are on a "rollercoaster" and heading "downhill fast", regulator Ofgem has warned again.
Chief executive Alistair Buchanan issued the stark warning to consumers and businesses to prepare for higher prices as power plants close, foreign gas supplies shrink and increasing demand tightens the British energy market.
Writing in The Daily Telegraph, Mr Buchanan said: "We have to face the likelihood that avoiding power shortages will also carry a price.
"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.
"Within three years we will see reserve margin of generation fall from below 14% to below 5%.
"That is uncomfortably tight."
With coal and oil-fired power stations closing earlier than expected to meet environmental targets, about 10% of current generation stock goes next month.
"Just when we need more gas, world demand for gas is set to tighten," said Mr Buchanan.
Compounding factors include expected gas supplies from the Russian Shtokman field being cancelled, China's demand rising by 20% a year and Asian gas costing 60% more than UK supplies.
On the option of shale gas, the Ofgem chief said: "No one doubts that there is plenty of gas out there, but what is critical to Britain is how much will be available over the next five years and how much we will have to pay for it to ensure it comes here."