Two days into spring and several inches of snow lies outside my window – I bet the heads of the energy corporations are rubbing their hands with glee at all the extra revenue they’ll reap.
Via Daily Mail:
- Plunging temperatures forced millions to turn up their heating
- Shortfall could add more than £200 to family bills, analysts warn
- Gas stores at their lowest level for three years with snow forecast
- Government insists gas needs are ‘continuing to be met’
- Britain relying on pipelines from Norway and shipments of liquefied gas
- Energy giant SSE was of ‘very real risk’ of lights going out
- Downing Street spokesman said: ‘It is absolutely clear that supplies are not running out’
Freezing Britain was last night facing the unprecedented prospect of gas rationing.
A combination of bitterly cold weather and pipeline failures has left the energy grid at breaking point.
The country has less than 36 hours of gas reserves remaining and one energy expert warned yesterday that if the cold snap continues, rationing is ‘inevitable’.
If this happens, businesses and power stations will be restricted first, but then householders will be ordered to cut down on the amount of gas they use for heating their homes.
Britain’s gas stores are dangerously low as unexpectedly low temperatures have forced people to keep their heating on.
The crisis deepened yesterday when a crucial undersea pipeline connecting Britain and Belgium shut down without warning, pushing the price of gas up by 50 per cent to a record high.
Ships bringing desperately needed supplies of liquefied natural gas (LNG) from Qatar are still more than two days away, and could be delayed further because of the bad weather.
The looming national energy crisis also threatens to push up household bills for hard-pressed families.
The Government admitted gas supplies were under pressure, but Downing Street said David Cameron was ‘confident’ that they would not run out. But energy analysts warned that with the freezing conditions set to last into next month the consequences were ‘worrying’.
Ann Robinson, analyst for uSwitch, said: ‘If this dreadful weather continues for the next two or three weeks we should be very worried, because if we get into a position where we do run out of gas there is not a lot that can be done in the short term.
‘Rationing would be inevitable, for businesses and domestic users and maybe for gas-powered electricity producers as well, so we might be looking at electricity rationing too.’ She said the Government’s response to the crisis had been ‘very complacent’.
Angelos Anastasiou, from investment bank Liberum Capital, added: ‘There’s a bit from the pipes and there’s LNG but that’s it. There isn’t any more. I would say rationing is a distinct possibility. We’re not there just yet, but it’s a distinct possibility.’
Energy Minister John Hayes said the issue was ‘a priority’ and confirmed he has held ‘discussions with industry and others about gas security’.
Michelle Mitchell, Age UK’s charity director general, highlighted fears for the elderly if the gas shortages become a reality.
She said: ‘This continuing bitter weather is a major threat to the health of older people, and older people need to know their gas supplies are guaranteed. Age UK would like the Government and the industry to offer them some public reassurance this weekend that the UK’s gas will continue to flow.’
The crisis was sparked early yesterday morning when a water pump failed at one of the four underwater pipelines that connect the UK and the Continent. The pipeline from Belgium, which has the capacity to supply around a fifth of the UK’s gas needs, was immediately shut down by operator Interconnector UK. The group said it ‘has a technical issue at its Bacton terminal which stopped gas flow into the UK’.
It began pumping gas at a reduced rate later in the morning, but had to shut operations again completely in the afternoon.
The full flow did not begin until late afternoon, and no one from Interconnector UK was last night able to say how much gas had been lost as a result of the outage.
The other pipelines – two from Norway and one from the Netherlands – were open during the day, although one is due to be shut down at the beginning of April for routine maintenance.
The daily price of gas rocketed to 150p a therm – up from Thursday’s price of 100p. It is the highest level ever seen in the UK gas markets, according to traders.
It came just hours after it emerged that the UK’s domestic gas stores have fallen to a new low after millions of households turned up their heating. The stores are now more than 90 per cent empty and have less than two days’ worth of gas remaining. They are forecast to be completely empty by early next month.
WHY SUPPLIES ARE ON A KNIFE EDGE
AS well as dwindling North Sea reserves, gas is running low in Britain because of the ‘limited’ size of storage facilities.
This means the UK is in a worse position than other EU countries when families turn up the heating to cope with cold winters.
At full capacity, Britain’s storage infrastructure can stockpile enough gas for up to 20 days.
This compares with more than 100 days in France, 92 days in Germany and 70 days in Italy. The US protects itself against gas shortages by storing contingencies for up to six months.
The historic lack of storage facilities and a failure to attract investment to build new ones has helped create the current crisis.
One reason for the lack of storage facilities is that the importing of gas, whether from the North Sea or overseas, fluctuates throughout the year.
In the UK, more gas is shipped in during the winter and is effectively dumped straight into the national grid so people can heat their homes. In the summer, demand drops off as householders switch off the heating.
This has been the case since British Gas began exploiting the resource in the 1960s. Consequently the country has never needed huge storage facilities.
On the continent, the supply of gas is ‘flatter’, according to the Oxford Institute for Energy Studies, so bigger stockpiles build up during the summer.
This means countries such as Germany have bigger storage facilities.
Analysts warned that higher gas prices now could push up long-term rates for next winter, adding 15 per cent, or more than £200, to the average family bill.
Apart from the North Sea, Britain’s only other source of gas comes from the volatile Gulf state of Qatar. The next delivery is not due for another two days, it is understood.
Ships can take two and a half weeks from leaving Qatar to arriving in Britain, and can often be delayed further by having to stop off to deliver at other ports.
Energy analyst Peter Atherton said: ‘When you run out of storage, National Grid will need to start reining demand back in.
‘You get cases where ships are told to turn around and go back because Japan is willing to pay more. We can get LNG here, but we will be bidding against the rest of the world. We can get it, but we will have to pay the price.’
National Grid has protocols for gas shortages, designed to stop households being affected immediately. Power stations which run on gas are the first to be rationed.
‘They can do that to keep the lights on because we have coal and oil-run power stations which can be ramped up to meet demand,’ said Mr Atherton.
But next month many of the UK’s coal and oil plants come offline to meet green regulations handed down by the EU, and will not be available as a stop-gap if another shortfall arises next winter
After the power stations, heavy industry and factories will see gas use sanctioned. Only after that has been tried will other businesses be asked to reduce usage – with households last on the list to face rations.
‘The answer is that we need more storage,’ said Mr Atherton. ‘We need to have enough to get through a winter if something happens to the interconnector pipes. Can we get through the winter on our own supplies? Other European countries can, but we certainly can’t.’
A Department of Energy spokesman said: ‘In the unlikely event of a gas supply emergency, Government and industry have in place well-rehearsed plans to ensure that gas supplies can continue, so that gas consumers would not be cut off.’
Mr Hayes said: ‘Protracted cold weather increases demand, but the UK gas market is functioning well and our gas needs are continuing to be met. Gas storage could never be the whole answer, so to think purely in terms of how many days’ supply is in storage, is unwise. We have relied on a diverse range of sources for many years.’
But Joe Conlan, of the Inenco energy consultancy, said: ‘There is a very real prospect of running out, especially given the colder weather forecast for next week, the long, cold winter and disruptions to supply as a result of a very intensive period of maintenance in Norway.’
He warned there was still a risk customers might be asked to rein in their gas use next week.
His calculations suggest the UK has just one and half day’s gas supply in storage. He said: ‘The next week is critical.’
The Department for Work and Pensions has made £4million in cold weather payments to help vulnerable people pay their bills during March. Not a penny was paid this month last year.