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Business Covers Shortfall If Gas Runs Out

Posted on: Wednesday, 5 October 2005, 09:00 CDT

By John Bowker

UK GAS supplies are not high enough to supply the whole population in the event of a severe winter, the energy regulator has warned, with businesses expected to make up any short-fall.

North Sea production decline and inadequate pipe-lines to Europe could deliver an up to 10 per cent short-fall in supplies if the UK suffers a so-called "one in 50" winter, such as 1962-3.

Ofgem chief executive Alastair Buchanan told The Scotsman: "On a very cold day - when UK homes are using more gas than a typical winter - we will have around 5-10 per cent less gas than we need." The figure he was using is about 16 per cent above average, and was last reached on a single day in January 2003.

The regulator's findings are likely to increase fears that some bill-payers - particularly pensioners - will be at risk of losing power in cold conditions. However, Buchanan promised the consumers would not suffer - as big business would be prepared to sell on pre- bought gas in order to make up the shortfall.

"The key is that we should not see gas cut off in any event," he said. "One major steel company has already worked out it could make more money selling gas at currently high prices than beating steel during an exceptionally cold period."

Buchanan added that there was a price at which almost all larger companies would be prepared to sell back gas they had bought at cheaper prices.

Source: Scotsman, The

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