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Ofgem boss warns of higher energy prices

Energy prices are set to increase, as the UK becomes increasingly dependant on imports, warns regulator.

Energy regulator Ofgem has warned consumers and businesses that it expects energy prices to rise, as ageing power stations are closed and Britain becomes more reliant on imported gas.

Ofgem chief executive Alistair Buchanan, writing in The Daily Telegraph, said:

“We have to face the likelihood that avoiding power shortages will also carry a price.

“If you can imagine a ride on a rollercoaster at a fairground, then this winter we are at the top of the circuit and we head downhill – fast.

“Within three years we will see reserve margin of generation fall from below 14% to below 5% – that is uncomfortably tight.”

“Just when we need more gas, world demand for gas is set to rise while our own supplies are predicted to fall by another 25% by 2020”.

Responding to Mr Buchanan’s comments, a spokesman for the Department of Energy and Climate Change (DECC) said:

“Our energy system faces significant challenges over coming years, including the closure of around one-fifth of our ageing power stations.

“So as Ofgem highlights, we cannot afford to be complacent and may face a looming energy gap.

“The reforms we are making to the electricity market through the Energy Bill and through our gas generation strategy are aimed at plugging this gap in order to keep the lights on.”

Hardly a positive message from the government and Ofgem but it is to be welcomed that a no nonsense, stark warning takes the place of the normal foot shuffling and navel gazing of the e

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