National Grid starts in-depth consultation on energy supplies for next winter

• Gas supplies could be tighter next winter if major import projects hit delays- all projects are currently reported on schedule
• Wholesale gas prices currently higher than last winter reflecting uncertainty over new imports
• Ofgem urges European and other gas importers to provide more information about levels of gas imports this winter
• Ofgem will work to get accurate information to the market on energy supplies so industry can prepare for winter in an orderly way

National Grid today highlights that gas supplies may be tighter next winter (2006-2007) in its first preliminary report on energy supplies.

Less gas from the North Sea and uncertainty about whether Britain’s largest gas storage facility, Rough, may be filled in time could see tighter gas supplies, especially at the start of next winter. However, there is a potential increase of supplies on last winter if the major new import projects are delivered on time and all facilities are used to import gas to Britain at full capacity when required. At the moment all the developers have confirmed their projects are on schedule to deliver gas this winter.

Ofgem’s Chief Executive Alistair Buchanan said: “National Grid’s report shows we potentially face another winter of tight gas supplies where demand-side response from gas-fired power stations and industry will again play a crucial role.

“While there is a possibility that supplies will increase if the new import projects are built on time, Ofgem believes that industry should adopt a cautious approach, as there is no room for complacency.  Major infrastructure projects can be delayed and as we saw last winter, new pipes and terminals are not always used at full capacity to import gas.

“Lack of transparent information about gas supplies and storage from Europe and elsewhere in the world remains a significant problem.  This makes it very difficult to predict the level of gas imports into Britain. To try and make up for this lack of information Ofgem is holding a series of meetings with  companies that could import gas into Britain to encourage them to provide National Grid with more accurate information about the levels of gas imports we can expect from the continent this winter.”

Ofgem has also taken steps to ensure the market has accurate and timely information about British offshore gas supplies.

“It is vital that industry and market take an active part in National Grid’s winter outlook consultation and provide the best information available.  Industrial customers and the energy markets will then be able to prepare for next winter,” said Mr Buchanan.

Electricity supply is expected to be similar to the last two winters with a ‘safety cushion’ of reserve generation at around 20 per cent.

Sources: http://www.ofgem.gov.uk

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