Will the lights go out?

Will the lights go out?

Are we going to see brownouts in the UK in the next five years?

Last year another coalition looked inevitable. There was no way in which the Conservatives could get a majority in the House of Commons. Now conventional wisdom divines that the Conservatives will dominate politics for at least two Parliaments, that Labour will implode and that George Osborne’s biggest problem in moving from Number 11 to Number 10 will be getting the sofas through the doorways.

Yet, it is easy to forget that the Government has a majority of twelve and that its not always true that the more things change the more they stay the same.

In July the National Grid warned that the safety cushion of capacity above predicted demand at peak usage will have fallen to 1.5 per cent this year. Last year it was 4.5 per cent and only four years ago it was as high as 17 per cent.

The Grid has a range of measures it can take, the most dramatic being when they lower the voltage in homes meaning lights dim. This would apply at times of high demand. Like during the ad break during a Coronation Street special where people start their kettles while keeping all their lights and TV screens on.

The situation has got so bad that the Prime Minister has called an emergency summit. It is also noteworthy that although it was expected that the new Energy Secretary, Amber Rudd MP, was widely expected to make a major energy announcement about future policy before party conference that she gave part of the picture – a deal on nuclear.

Meanwhile UK energy providers are awaiting the outcome of a final report by the Competition and Markets Authority into the energy supply market.

At the same time the providers feel they are being undercut. One of the shorter term ways in which the UK is attempting to keep the lights on and the bills low is to hold what are called ‘capacity auctions’. In these auctions power suppliers bid against each other to provide energy at the lowest price. The auctions drove prices down but created resentment and caused further concerns about the long-term. Much of the energy supply will come from interconnectors bringing power from mainland Europe or from diesel generators.

UK suppliers feel that overseas suppliers should be subject to the carbon price floor – a charge on fossil fuel generated energy.

It is understood that in response that the Prime Minister is calling in Oliver Letwin MP to look into the issues. One solution is to change the rules of the capacity auctions to encourage new development. Burning diesel is not a long-term solution and, indeed, is not designed as such.

The problem however is that there is now little wiggle room. If the lights dim then the PM will get the blame and the fixes really are far from simple. The Conservatives may get the rap for the long term decisions taken by Labour.

The impact on households and businesses will be managed but the effect on politics make be much harder to control.

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