There is little realistic prospect of the lights going out and the regulator should do more to explain this, the watchdog said.
Reports on power generation capacity are “open to misinterpretation” and cause “unnecessary public concern and anxiety”, Consumer Futures director of strategic infrastructure Richard Hall said in a consultation response. “We recognise that Ofgem cannot control the media narrative; however the widespread misunderstanding of what the reports were showing does suggest that the data needs to be better contextualised.”
He called on the regulator to provide more historical context and detail on the likely length, breadth and depth of supply interruptions.
Ofgem’s 2013 report showed a sharp drop in the capacity margin from 2013/14 to 2015/16. However, it failed to show that the margin in 2013/14 was “actually quite high by historic standards”, said Hall. “There is always a risk that peaks look particularly high and troughs look particularly shallow, when short time series are used.”
Likewise, results can be interpreted as a return to “1970s-style three day weeks” in the absence of information on which customers are likely to be affected and for how long, he said. Household supplies are only interrupted if there is still a shortfall after heavy industry and businesses have been cut off.
Hall also asked Ofgem to assess the likely bill impact of tightening capacity margins: “Historic oversupply will have had a dampening effect on wholesale prices that will lift as margins tighten. We would also expect to see an increased scarcity premium in the value of balancing plant. It would therefore be extremely useful if you could include a sense of net cost to consumers of different scenarios.”