OFGEM report on problematic future energy supplies – admission of market failure in electricty supplies

The report is at:
http://www.ofgem.gov.uk/Markets/WhlMkts/Discovery/Documents1/Project_Discove
ry_FebConDoc_FINAL.pdf

News articles at:

http://news.bbc.co.uk/1/hi/business/8494899.stm

http://www.telegraph.co.uk/finance/personalfinance/consumertips/household-
bills/7144386/British-households-risk-unaffordable-energy-bills-Ofgem-
warns.html


http://uk.finance.yahoo.com/news/sse-says-customers-using-less-gas-electricity-reuters_molt-20a544628846.html

A little interpretation:

Quote: “There is a need for unprecedented levels of investment to be
sustained over many years in difficult financial conditions and against a
background of increased risk and uncertainty.”

To translate, “the fat cats and their shareholders have been taking far too
many bonuses rather than spending their money on the infrastructure required
to handle North Sea depletion.”

Quote: “Short term price signals at times of system stress do not fully
reflect the value that customers place on supply security which may mean
that the incentives to make additional peak energy supplies available and to
invest in peaking capacity are not strong enough.”

Or, “we’re stuffed and we’re panicking that the public are going to blame us
and string up up from an unlit street light”.

Quote: “A minimum carbon price, which would provide long term certainty for
investors and should bring forward low carbon investment, features in three
of
the packages.”

Or, “OK, we admit that nuclear needs subsidies, and valuing carbon is the
only
way we can think of paying for the new nuclear build”.

Quote: “Interdependence with international markets exposes GB to a range of
additional risks that may undermine GB security of supply.”

Or, “we have to import our energy now and people might not want to sell it
to
us”.

Quote: “The higher cost of gas and electricity may mean that increasing
numbers of consumers are not able to afford adequate levels of energy to
meet
their requirements and that the competitiveness of industry and business is
affected.”

Or, “even if energy is available we probably won’t be able to afford it
because
everyone else will be trying to buy it due to the plateau in production”.

Quote: “We welcome responses to this consultation by 31 March 2010.”

Or, “We’re absolutely bricking it and we hope that we can load the blame
onto
someone else by getting them to suggest an alternative.”

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