UK at ‘significant risk’ of gas supply emergency, Ofgem warns

UK at ‘significant risk’ of gas supply emergency, Ofgem warns

The energy regulator has warned that the UK is facing a “significant risk” of gas shortages this winter.

Ofgem said that, because of Russia’s war with Ukraine, there was a possibility the UK would enter a “gas supply emergency”.

A gas supply emergency can be declared when suppliers are unable to safely get gas to homes and businesses.

Ofgem said: “Due to the war in Ukraine and gas shortages in Europe, there is a significant risk that gas shortages could occur during the winter of 2022-23 in Great Britain. As a result, there is a possibility that Great Britain could enter into a gas supply emergency.”

It could mean that some customers, starting with the largest industrial consumers, will be asked to stop using gas for temporary periods.

The aim would be to keep supplies stable for households for as long as possible.

The information, which was revealed in a letter sent from Ofgem last week and first revealed by The Times, spoke of the possibility of “gas supply emergency” measures due to the impact of Russia’s war in Ukraine, which has starved Europe of its main source of natural gas.

The energy supplier SSE said that by raising the issue with Ofgem it “would protect security of supply by ensuring gas-fired power stations are able to provide vital flexible generation through challenging periods”.

A spokesperson said: “There is broad industry agreement on the need to examine this issue, with the decision ultimately one for Ofgem.”

More than eight in 10 UK households use gas to heat their homes and more than 40 per cent of the electricity generated in Britain over the last year came from gas-powered plants. If a potential supply emergency gets bad enough this winter, these power plants, and other big gas users, might be cut off temporarily, Ofgem said.

Energy suppliers are concerned about a possible emergency ahead of the winter (PA)
Energy suppliers are concerned about a possible emergency ahead of the winter (PA)

Tom Haddon, a senior consultant at Arcadis, said shortages were “viable”. But he argued that they were “so unlikely that it still sits in the red herring paddock”.

On Twitter, he said the government’s promise to top up payments for people’s energy bills regardless of what price the market sets would mean more suppliers bringing their liquefied natural gas (LNG) to British ports.

“Government has signalled to LNG markets it will allow utilities to pay any price for imports by enacting energy bills support,” Mr Haddon wrote.

He added: “Now, the bit missing is that super peak demand (cold, dark evening), where we would expect the gas to start flowing from Netherlands-based storage into the UK.”

He said the LNG capacity in the UK “still covers us, just”, but warned of massive price spikes.

Liz Truss ruled out energy rationing during her leadership campaign (AP)
Liz Truss ruled out energy rationing during her leadership campaign (AP)

During her Conservative Party leadership campaign, Liz Truss claimed there would be no new taxes or energy rationing if she became prime minister. Pressed at a hustings event in August on whether she could rule out energy rationing, Ms Truss replied: “I do rule that out.”

However, former leadership hopeful Rishi Sunak said “we shouldn’t rule anything out” after the French government warned it might have to ration energy, urging company bosses to take steps to curb consumption.

At the time of her guarantee, Gavin Barwell, Theresa May’s former chief of staff, suggested Truss was “crazy” to rule out energy rationing.

He tweeted: “So if it is a cold winter and there simply isn’t enough energy to go round – which is a real risk – we are just going to have random blackouts rather than the government rationing non-domestic use so that vulnerable people don’t find themselves without heating.”