Extracts from the Sept-October 2001 edition of Renew
These extracts only represent about 25% of it

11. DTI Surfing USA for UK tips

UK Energy Minister Brian Wilson, recently visited California to get information on the post-deregulation power crisis there. He told the FT (FT 18 July) "My attitude is why should we spend time looking into a crystal ball when we could actually read the book". Ominously he was told by Californian utility regulators that US generators honed their trading skills in mid-1990s in the deregulated British market. They then took these skills back to California, where "because of the state of the market they were able to take advantage of very high prices and to manipulate the system," says the minister. "My concern is that we would obviously not want to see that ever happening here."

Wilson concluded that the main lesson was that generators will have to be "carefully controlled" if UK consumers were to be protected from a repeat of California's problems. However, Ofgem, the UK energy regulator, has voiced concerns that new electricity trading arrangements (NETA) introduced in March will not prevent generators from seeking ways of abusing the market. It could have added that, perversely, NETA was also undermining the market for power from renewables and CHP.

Although, the FT noted that, ‘energy experts do not expect British lights to go out in the near term’, Wilson did point out that only six years ago California had a surplus of electricity capacity similar to the 29% currently enjoyed by England and Wales.

The FT added ‘Driving the minister’s concerns is the need for a balanced energy portfolio as Britain moves from having a surplus of natural gas to importing about 15 per cent of its needs in the next five years. Gas fired generation, which has risen from virtually nothing 10 years ago to supply more than 30 per cent of the country's power needs, is still growing rapidly. Alarm bells have been triggered by a doubling of wholesale gas prices since 1999. Mr Wilson believes the current diversity of energy supply should be maintained but the country needs to get better at reducing carbon dioxide emissions. If the market was left to its own devices, the drift to gas would continue. To prevent this, the government would need to set a framework within which the market operates’.

Nuclear or Renewables?

Wilson commented "Nobody is looking for a return to government intervention but there is no point having a policy that protects energy security unless it can be implemented." He added that although no decision has yet been taken, with the nuclear component due to reduce as old plants were retired, "it would be lemming-like to allow nuclear to fade away without pointing out that we rely on it for 25% of our power".

According to the FT Wilson ‘is yet to be convinced that renewable energy generation could completely replace atomic plants, but acknowledges that Britain needs to do much more to boost green power. He is critical of environmentalists who oppose small scale hydro-electric and onshore wind farms and hints that reforms may be needed to streamline the planning process for various kinds of green energy schemes’. He added "If we are going to make a serious stab at renewables there has to be some give and take from environmentalists".