Government warns of another winter of gas shortages

Supplies limited by lack of storage capacity· Big six have already raised prices at least 35% this year Terry MacalisterWednesday August 23, 2006The Guardian
The government gave a warning yesterday that Britain was heading into another winter of potential power shortages as one household gas supplier announced a record 30% increase in prices.
The energy minister, Malcolm Wicks, said rising demand and plunging output from North Sea fields cancelled out the benefits of new gas pipelines from Norway and the Netherlands.
"It's not going to be the easiest of winters and we need to manage this with care and make sure we get it right," said Mr Wicks from the sidelines of an energy industry conference in Norway. "It's looking the same as the last two or three years."
Dwindling output from the North Sea has turned the UK into a net importer after decades as an exporter of surplus gas. New pipelines were meant to relieve the pressure this year.
Industry experts had previously argued that the last two winters would be the end of the energy squeeze as new outlets opened and more storage capacity was put in place. But though the pipelines have been built, the storage facilities have seen delays in obtaining planning consents, leaving the country vulnerable at a time when demand is growing and domestic production is falling faster than expected.
The government has met with leading gas suppliers to ensure that maintenance work on platforms and pipelines has been carried out before the winter. But the Health and Safety Executive warned two weeks ago that some companies were falling behind on repairs, increasing the likelihood of breakdowns and disruptions to output.
The consumer group energywatch agreed with the minister's downbeat assessment and said a vicious cold spell could lead to another round of price increases on top of unprecedented rises over the past 12 months.
Ebico, a supplier of power to 10,000 customers, has become the latest company to raise its prices, with the gas tariff going up by 30% and electricity prices by up to 25%.
"We have kept the prices stable for the last 12 months but we cannot resist the wholesale prices rises any more and have had to move," said its chief executive Phil Levermore.
Paul Green, chief executive at energyhelpline.com, a company that offers consumers help with switching providers, said the Ebico rise was a blow for those who had been enjoying some of the cheapest prices on the market. "Ebico has been forced to follow the big six suppliers and put up its prices to balance skyrocketing wholesale costs," he said.
"As Ebico buys its energy from Scottish and Southern Energy, we are likely to see a further price rise announcement from SSE later this year as it passes rising costs on to customers. This will affect a further 6.7m UK households."
Energywatch defended Ebico's rise and pointed out that it was still a relatively cheap supplier that ensured that pre-payment customers on low incomes were not discriminated against.
"This really needs to be put in context," said a spokeswoman for energywatch. "This is a small company that had stood aside while the big six providers increased their prices three times."
According to energywatch, SSE has already put its gas prices up by a cumulative 35% and electricity prices by 22.5% through a series of changes in 2006. The consumer group says British Gas has increased its gas tariff by 37% this year and Powergen by 47%.