Electricity Supply

Part of the debate – in the House of Commons at 12:38 pm on 16th September 2003.

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Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry) 12:38 pm, 16th September 2003

Indeed.

Let us consider the short-term problem first. There are growing concerns about the risk of power cuts in the next year or two. Professor Ian Fells of the New and Renewable Energy Centre at Newcastle university said:

"A black-out could happen here . . . I have come to the conclusion that there is a 20 per cent. chance of power cuts this winter . . . In January and February, there are vulnerable weeks when they"— the National Grid

"might not be able to meet their obligations . . . The amount of spare capacity has been cut back dangerously."

Generating capacity, according to figures from the House of Commons Library, is almost 15 per cent. less than it was two years ago. The Ofgem fact sheet 31 published last week confirms that the margin of spare capacity is now only 16 per cent., though that will rise to 18 per cent. when the Isle of Grain comes back on stream. Ofgem itself admits that this margin is lower than it has been in the past and a margin of 20 per cent. has previously been considered the minimum acceptable. No wonder the well-respected Dieter Helm, director of Oxford Economic Research Associates and an adviser to the DTI, earlier this month commented:

"I have always been much more concerned about the conventional bad scenario—when there is a cold spell in winter, and there is a failure at a nuclear power station. Suddenly, there is a shortage and you're getting within capacity boundaries you shouldn't get inside. The risk of an outage is very great indeed."

David Porter, chief executive of the Association of Electricity Producers, warned just after the London power failure what might happen if there was a cold snap and a couple of power stations broke down. He stated:

"If something like that happened this winter, the prospects would look considerably blacker . . . I don't think you'll find many people in the industry who will tell you now—at the end of August—that they can guarantee there won't be blackouts this winter."

Jonathan Stern, director at the Oxford Institute for Energy Studies, points out:

"Equipment is just getting old and is getting less reliable."

Despite all these warnings from a variety of authoritative sources, the Government's attitude continues to veer between complacency and carelessness. In the section of the DTI departmental report for 2003 entitled, encouragingly, "Security of Supply", we read:

"Emergency arrangements for the energy sector continue to be reviewed and updated in the light of lessons learnt from the fuel crisis of 2000 and the events of 11 September 2001."

Those lessons are being learned somewhat slowly, as the document was published in May 2003. It adds that:

"the Joint DTI and Ofgem Energy Security of Supply Working Group . . . was established to assess risks to Britain's future gas and electricity supplies: specifically developing indicators for energy security to make information more widely available."

I am not sure how comforting it is to all the customers who may be horrendously inconvenienced to know that the Government are developing indicators to make information more available. For this Government, indicators seem even lower down the pecking order than the targets to which many Ministers are addicted.

The report goes on to state that, after the October 2002 storms, the DTI "launched an investigation"—