Energy Customers Bound To Pay £378m To Prevent Black-Outs In The Winter

November 26th, 2019
Energy

Black-outs and energy security threats are the ruling concern of the UK energy market. Both bring with them the fear of darkness in the UK and for a long time needed a permanent solution. The newly formed government has come up with a new scheme so that energy consumers get an uninterrupted supply of energy during the winter season. The scheme involves inviting energy suppliers for capacity auctioning that would select those that offer power at the least prices over the expensive ones. These power plants would run as a back-up power supply so that there are no chances of black-outs.

In this scheme, the government would pay the back-up power plants for offering uninterrupted energy supply. However, this is not the most affordable bet as suggested by many energy experts. The auctions ended on the 3rd of Feb making it clear that the extra cost of the back-up power plants comes out to be £378m a year. It was decided that extra 54GW of power would be produced by suppliers at a price of £6.95 a kilowatt. This cost would cave in £120m paid to purchase 3GW of extra power in this winter.

The contracts hired 96% of the existing power plants and interconnectors while a nominal of 3% would be supplied by new suppliers. Gas power plants would suffice the need of 22GW of power while coal power plants would be reserved for generating 10GW of energy next year. Energy Minister appreciated the initiative by saying that “Thanks to this auction, homes and businesses can have confidence in the availability of that electricity at the lowest possible cost.”

On the other hand, some experts have taken a critical view on the method. Experts like Jon Ferris, an analyst with Utilitywise, begged to differ by saying that “the scheme is like a sledgehammer trying to crack a nut. Government should instead incentivise demand reduction or flexibility at peak times to help consumers and the businesses that depend on a well-functioning energy market particularly at a time of economic uncertainty.”

Most critics consider £378m a year as a gigantic figure that would prove quite heavy for the energy bill payers. This would be an additional cost apart from the rising energy prices, which are expected to be announced by companies in the upcoming months. Npower has already raised £109 for its standard tariff customers and its contemporaries are expected to follow suit. Experts predict that rest of the Big Six suppliers would make price rise announcement by the end of April this year. Consumers should be ready for a 5 to 10% price rise from the Big Six suppliers.

The hike was made by overruling the warning given by the energy regulator Ofgem, which cautioned the suppliers to limit the energy prices to give maximum benefits to the customers. Even the reigning government has criticised Npower’s price hike announcement and may rescue the customers by intervening. Experts suggest that due to both these reasons, winter energy bills would prove quite heavy to consumers.

To conclude, government schemes and increasing energy prices are a sign to future increases in energy bills. If you don’t make a switch to a cheaper energy supplier then you would end up losing a lot of money from you energy bills. To know which supplier is best for you, view our energy price and tariff comparison on https://freepricecompare.com/home-energy/ or to check out the best discount deals, call our friendly team of energy comparison experts on 02034757476.

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