Letters: Making sure the lights don’t go out
Given the long lead times for building new electricity capacity we should all be concerned that around a quarter of the UK’s electricity generating capacity must be replaced in the next 10 years (Only state intervention can keep the lights on, says Ofgem, 4 February). However, it is even more worrying that plans to replace this shortfall are so poorly advanced. Some 20 gigawatts of new capacity are “under way”, but only 8GW is actually under construction. It would not take much to go wrong for power cuts to become widespread.
However, before politicians start blaming the UK’s liberalised energy markets and call for a return to full government control, it is worth remembering that political indecision has contributed greatly to the possibility of an “energy crunch”. Investors in new capacity can deal with market risks, but often find the burden of political and regulatory risk more challenging. Demonising large energy companies over their pricing and threatening windfall taxes may win votes, but it will not bring new capacity on line. Delays in obtaining planning approval for new power stations do not help either.
Graeme Leach
Chief economist, Institute of Directors
• Ofgem’s Damascene conversion to state supervision of the privatised energy industry is a big step in the right direction. This is long overdue in a world of pretend competition that characterises the results of past dogmatic privatisations. However, more radical changes are needed if the new CEGB is given a proper role, including: responsibility for planning and commissioning capacity; reducing the absurd plethora of pricing schemes to a small number of national tariffs; reversing the structure of current tariffs so that low-energy users are no longer penalised; raising the 5% energy VAT to the general rate and phasing in carbon pricing; setting and enforcing energy-saving targets for the energy companies. Above all, dealing with climate change demands that the energy industry is controlled by the state and not just influenced by it.
Patrick Newman
Director of IT development, Energywatch 2000-02
•?Hidden deep in the appendices of Ofgem’s Project Discovery report is the unnerving admission that four of the six main energy suppliers consider the findings to be too optimistic; uSwitch warns that bills could top £4,000 a year by 2020 (£2,000-a-year fuel bill nears, 4 January). Any massive rise in the cost of energy will not just affect domestic consumers, but all industrial, commercial and public sector consumers as well. Cheap energy has been the lifeblood of our extravagant existence, and the impact of higher costs on the economy and our lifestyles could be profound.
The report focuses on the £200bn of capital investment required. I can’t see the equally vital analysis of likely future gas prices, in the context of rapidly approaching peak oil. While gas is more abundant than oil, their prices are closely linked. As we wean ourselves off fossil fuels, our appetite for electricity will grow. Ground-source heat pumps, battery charging and hydrolising water all need reliable electricity supplies.
We are told that the government will be making announcements on this issue at the time of the budget. Let’s hope that this government and the next one really get to grip with the issue.
Jeffrey Streule
Stewkley, Bedfordshire
•?It is good news that British Gas has dropped the unfair price differential on pre-payment meters, which effectively meant those customers on the least income were often paying the most (Money, 6 February). Charities such as ours have often criticised meter tariffs as aggravating fuel poverty. However, while pre-payment customers will now pay the same as customers paying with cash or cheque, they will still pay more than those able to pay via direct debit. Many poor families aren’t able to do this. Moreover, even with the cuts, there are cheaper suppliers to be found online – but the same vulnerable families are often without access to the internet. British Gas’s initiative is welcome but cannot address this problem alone.
Helen Dent
Chief executive, Family Action
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