Rising energy bills warning

Energy bills are set to rise because Britain will become more reliant on energy imports to fill a shortfall in domestic production, the industry watchdog has warned. Ofgem said supplies are on a "rollercoaster" and heading "downhill fast".

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Ofgem chief: 'World demand for gas set to tighten'

The head of energy regulator Ofgem warned that with coal and oil-fired power stations closing earlier than expected to meet environmental targets, about 10 percent of current generation stock goes next month.

"Just when we need more gas, world demand for gas is set to tighten," Ofgem Chief Executive Alistair Buchanan said.

Compounding factors include expected gas supplies from Russia's Shtokman field being cancelled, China's demand rising by 20 percent a year and Asian gas costing 60 percent more than UK supplies.

On the option of shale gas, Mr Buchanan said, "No-one doubts that there is plenty of gas out there, but what is critical to Britain is how much will be available over the next five years and how much we will have to pay for it to ensure it comes here".

Ofgem boss warns of energy 'rollercoaster'

Energy supplies are on a "rollercoaster" that's heading "downhill fast", the head of regulator Ofgem has warned.

Ofgem Chief Executive Alistair Buchanan told consumers and businesses to prepare for higher prices as power plants close, foreign gas supplies shrink and increasing demand tightens the British energy market.

Ofgem Chief Executive Alistair Buchanan has warned energy prices are set to rise. Credit: Rui Vieira/PA Wire

Writing in The Daily Telegraph, Mr Buchanan said, "We have to face the likelihood that avoiding power shortages will also carry a price".

"If you can imagine a ride on a rollercoaster at a fairground, then this winter we are at the top of the circuit and we head downhill - fast," he continued. "Within three years we will see reserve margin of generation fall from below 14 percent to below five percent".

"That is uncomfortably tight", Mr Buchanan added.

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