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British Gas is organising blackouts for 2017 to maximise its profits

Sam Laidlaw, chief executive of Centrica (ex-British Gas), has got a cheek. He has just announced that “we think by 2017-8 we’re going to see loadshedding (i.e. rolling blackouts) at certain times of day if you have nuclear or other outages”. He added that new generating capacity was essential if the UK is to avoid blackouts, but then declared that Centrica won’t build any gas plants in the UK for at least 4 years – thus bringing about the very disaster he’s predicting.

Why so obtuse? Because Laidlaw is much more concerned about Centrica profits than the national interest. With about 10% of Britain’s generation stock about to be retired in April, putting intense pressure on the reserve margin available at times of peak usage, the coal plants scheduled for closure were supposed to be replaced by nuclear reactors and offshore wind farms, but these have been delayed by the financial crisis and uncertainty over government policy. Now Laidlaw’s refusal to fill the looming gap by building new gas plants is the last straw.

What’s his game? The Energy Bill before Parliament is intended to remove uncertainty by creating a market for gas-fired power. That would involve auctions for power capacity that oblige winners to deliver energy at times of peak demand. But Laidlaw is putting company before country by refusing to make a final investment decision on a new gas-fired plant until he wins a capacity auction, which are not expected to take place before 2015.

By deliberately not investing in order to make the energy gap worse and sooner, Centrica is blackmailing the government/taxpayer into providing huge capacity payments under the Energy Bill even larger and earlier than would otherwise be the cased. By declaring it (and other energy companies) might not come to a deal if the price isn’t right, they are engaging in extortion, not negotiation. You’d get a better deal from Somali pirates.

Indeed the government is now getting so desperate about the coming black hole in energy supply that it has been forced to break its pledge, persistently and adamantly repeated, that it would never provide public subsidies to new nuclear. As one company after another has withdrawn from the nuclear competition, the Tories have been hung out to dry and have ended up ignominiously having to offer a public subsidy worth some £1bn a year simply to keep the lights from going out. Altogether this must work out as the most counter-productiveand self-destroying energy policy of the last 30 years.

One Comment

  1. Rob Anderson says:

    If they’re so intent on putting profit before service to the clients, it’s time to re-nationalise the gas companies and the electricity companies; energy companies are making billions of pounds profit every year, and if you don’t have access to the internet, you’ve virtually no chance of finding the cheapest energy suppliers out there.

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