RESILIENCE OF THE NATIONAL ELECTRICITY NETWORK
Publication of Report
Embargoed until 10.00 am on Wednesday 10 March
The Trade and Industry Committee today published its Report on The resilience of the national electricity network.
Following a series of power cuts in the UK and elsewhere in August to September last year, commentators expressed concerns about the resilience of the electricity network in the UK and suggested that there was an imminent and growing danger of blackouts. The Department of Trade and Industry and the industry regulator, Ofgem, launched inquiries into the causes of the incidents in England. The Committee therefore decided that, instead of replicating these studies, it would initiate a more general inquiry into the condition of the electricity infrastructure, the challenges likely to be faced by electricity companies over the next 20 years or so, and the roles of the DTI and Ofgem in ensuring that consumers in the UK have a reliable electricity supply.
The Committee concludes that, although major power failures like those experienced in North America and Italy are unlikely to happen here, there is a danger that there is currently insufficient investment in the network to replace in a planned and orderly way equipment which is reaching the end of its life.
Coupled with this under-investment has been pressure to minimise operational expenditure, for example on maintenance and repair. While this pressure has doubtless resulted in reducing some inefficiencies, the Committee thinks that to continue it may be counter-productive for network performance: ageing assets are likely to require more, and more skilled, maintenance. In relation to this, the Committee also raises concerns about a likely shortage of highly skilled staff both to maintain and to reconstruct the network.
The Committee notes that there is a pressing need for extra investment to ensure that the network is able to cope with the expected closure of a number of large nuclear plants and the growth in renewable generation over the next 10 to 20 years.
The Committee also considers the size of the investment required to meet all these objectives. It was told that, simply to maintain present performance levels, capital expenditure by the network owners would have to double. Investment to meet environmental objectives (the renewables programme) and for any desired improvements in performance would be extra. Although the total sums involved are high, network costs form a smaller proportion of customer bills than the cost of generating electricity, so a substantial increase in investment need not result in a steep rise in electricity prices.
Commenting on the Report, Martin O=Neill MP, Chairman of the Committee, said: "Network performance, especially by the transmission companies, is good. However, we consider that the Regulator's concern to reduce costs to consumers should now be tempered by a greater emphasis on ensuring that electricity network owners have the financial resources necessary to secure a viable long-term electricity supply."
Copies of the Third Report of Session 2003-04 can be downloaded from our website: (www.parliament.uk/commons/selcom/t&ihome.htm
10 March 2004