Companies face power rationing

13 April 2012

INDUSTRY has been warned that it will have to accept power rationing or face the prospect of blackouts in the winter.

National Grid Transco, which distributes gas and electricity in the UK, has begun talks with industrial customers about 'turndown' contracts that would allow it to cut power at short notice when supplies are tight.

Companies are being offered lucrative deals to sign up to the powerrationing programme. NGT said it was 'nothing new'.

The issue of potential power shortages has been thrown into sharp relief by the electricity blackouts in North America.

The UK had until recently seen years of overcapacity in the electricity supply. But that came to an abrupt end two years ago when the Government introduced the New Electricity Trading Arrangements (Neta) which resulted in price falls of 40%.

At the same time, industry is concerned about the adequacy of the gas supply. The Neta arrangements also pushed the nuclear power industry into near bankruptcy.

The Government-backed rescue of British Energy is reportedly in jeopardy because of a row over how much of a stake shareholders should be given in the restructured business.

Separately, the tussle for control of crisis-hit power station Drax comes to a head this week. Anglo-Australian miner BHP Billiton late last week offered to pay 70p in the pound for Drax's debt, trumping bids by International Power and Goldman Sachs, but it faces opposition from British mining group UK Coal.

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