The United Kingdom already suffers from power shortages, but a government investigation into the six largest British power companies has stoked fears that the country could be hit by massive blackouts.
Britain’s Competition and Markets Authority launched a probe into price competition among the country’s largest power companies, checking for any evidence of collusion to keep prices higher. But power companies warn that the government probe could delay vital investments to expand the country’s power capacity.
“There is an increasing risk. A lot can be done in terms of demand management, but actually building a new gas power station does take four years,” Sam Laidlaw, head of the gas company Centrica, told the BBC. “So that’s the kind of time pressure we are up against, by adding another two years that makes it six years.”
It’s not just utilities sounding the warning bell. Energy analysts are also warning that the investigation — which could last up to 24 months — would cause uncertainty and delay critical energy investments which would increase the risks of blackouts.
“The tightening of reserve margins that is now unavoidable for the next two winters will extend and get deeper, as more power stations will be closing,” said Peter Atherton, energy analyst at Liberum, referring to the safety buffer of spare power capacity between supply and demand. “There is no room for unexpected events and we could even get to a point where there is no reserve margin.”
The probe comes as politicians pressure utilities to keep power prices down — which have risen 120 percent in the last decade. The probe also comes as UK lawmakers debate axing the country’s green tax, which is added to consumer energy bills and helps drive up the price.
Both UK conservatives and liberals have been pushing for energy price freezes to stem the rising costs of powering and heating homes across the country. In particularly as there are about 4.5 million British families facing “fuel poverty.” The British utility SSE recently announced it was freezing power prices at their current levels until 2016 — but along with the price freeze came 500 layoffs and shelved plans for power expansion.
“It is hugely welcome in our country that energy companies are cutting and freezing their bills,” UK Prime Minister David Cameron told parliament, adding that his government’s rolling back of green policies was the reason for price freezes.
But Labour opposition leader Ed Miliband has promised to continue the prize freeze push if his party wins next year.
“We have to mend the broken energy market and freeze bills up to 2017 not just for customers of one company but for all customers of all the energy companies and all customers,” Miliband said.
“The next Labour government would ban the energy companies from rolling small businesses on to more expensive tariffs without their consent,” he added. “And we will create proper competition enforced by a new regulator to keep prices as low as possible for the years ahead.”
Green taxes and environmental opposition have made it difficult for the UK to meet its current energy needs. The country has recently allowed for hydraulic fracturing operations to move forward, but progress has been slow.
The North Sea’s natural gas output has been falling and refineries have been shuttered across the country. The UK has now become a net petroleum importer for the first time since 1984.
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