Informer Issue 562 - 23/08/2022

Industry body EnergyUK has urged the Government to consider setting up a new dedicated Department of Energy and an expert panel to look at ways of keeping bills affordable for businesses and households. In a letter to the Chancellor of the Exchequer, the organisation has set out a series of proposals for reducing costs. EnergyUK said high prices are “set to persist throughout 2023, with further big increases predicted for January and April,” It said Government-backed loans could be used to keep bills down throughout 2023 by covering the increased cost of wholesale energy for suppliers and allowing these to be spread over a much longer period of 10-15 years instead. Dhara Vyas, Energy UK’s Director of Advocacy, called for “solutions that match the scale of the problem”. “The consequences of leaving customers to face bills that would have been unimaginable even a few months ago demands that we do whatever it takes to help them.” Read more

Keeping coal-fired power plants open this winter could cost up to £420m, the system operator has revealed. National Grid ESO said the upfront cost of the agreements to prolong the life of several plants are expected to be between £220m and £420m. The units will be available from 1 October until 31 March, with costs recovered through Balancing Services Use of System charges during the period. The ESO said the contracts with coal plant operators are only intended to be used when all commercial options have been exhausted within the Balancing Mechanism. EDF’s West Burton A site and a Drax facility in Yorkshire were due to close this Autumn but will now remain operational over the winter following talks with the Government. Discussions over a third site, Uniper, are continuing. Energy Secretary Kwasi Kwarteng said the decision was a sensible precaution given Russia was cutting off gas to parts of Europe. Read more

Households could be soon offered financial incentives to help reduce peak power demand. National Grid ESO is working on plans for a new service to reward consumers who are willing to switch usage of appliances to times of low energy demand on the network. The service would follow on from a successful trial staged by the system operator and Octopus Energy. During the trial, customers were asked to turn down their electricity use over pre-defined two-hour windows Households that cut their electricity use by 40-60% during these periods were offered discounted electricity. A National Grid ESO spokesman said: “We are developing a new service that will be available for consumers to benefit from across this winter and will be announcing further information soon.” Read more

A non-executive director at Ofgem has resigned from its board over changes to the way the domestic energy price cap is set. Christine Farnish said she felt the regulator had not "struck the right balance between the interests of consumers and interests of suppliers". Farnish had served on the board for more than six years, and her term was due to finish within the next six months. Ofgem said throughout her time “she has actively and vocally championed the consumer interest, putting this at the heart of her proposals, decision-making and interactions with colleagues”. The regulator stressed it “always prioritise consumers' needs both in the immediate and long term". Cornwall Insight analysts have estimated that a typical household will pay £3,554 for its annual energy bills when the latest price cap is revealed for October. Read more

The Rough gas storage facility could re-open within weeks as part of moves to strengthen security of supply over winter. The Government and Centrica, which owns the site, are understood to be in talks over support which are expected to be finalised imminently. In July the Rough facility off the coast of Yorkshire was awarded a licence by regulators for its operation. The site used to supply around 70% of the UK’s gas storage capacity but was closed in 2018 on economic grounds. Concerns over gas supplies this winter has led to moves to re-open the site. It is though capacity would be built up gradually and the facility could eventually be used to store hydrogen. Read more