A parliamentary trade & industry select committee enquiry into last year’s power cuts has projected that investment in replacing the electricity network infrastructure needs to double, implying an additional £1.5 billion to be obtained from retail customers over the next ten years. It criticised the government regulator Ofgem for pursuing policies giving a higher priority to reducing consumer prices than to protective investment.

Power cuts in the UK and elsewhere in August and September last year, affecting around 700 000 consumers, led to legitimate concerns about the resilience of the UK electricity network and the imminence and growing danger of blackouts on a more serious scale. The T & I committee’s report Resilience of the national electricity network’ has led to the conclusion that, although major power failures like those experienced in North America and Italy are unlikely to happen in the UK, there is a danger that there is currently insufficient investment in the network for planned, routine replacement of equipment which is reaching the end of its life. Coupled with this under-investment has been pressure to minimise operational expenditure, for example on maintenance and repair. While this pressure has resulted in reducing some inefficiencies, to continue it may be counter-productive for network performance: ageing assets are likely to require more, and more skilled, maintenance.

The committee also raised concerns about a likely shortage of skilled staff and noted that extra investment would be required to ensure that the network is ready for the anticipated changes in electricity generation over the next ten to twenty years, that is, the expected closure of a number of large nuclear plants and the growth in renewable generation. Simply to maintain present performance levels capital expenditure by the network owners would have to double. Investment to meet environmental objectives (the renewables programme) and for any desired improvements in performance would be additional.

Although the total sums involved are high, network costs form a smaller proportion of customer’s bills than the cost of generating electricity, so a substantial increase in investment need not result in a steep rise in electricity prices. Network performance, especially by the transmission companies, is good. However, says the report “the regulator’s concern to reduce costs to consumers should now be tempered by a greater emphasis on ensuring that electricity network owners have the financial resources necessary to secure a viable long-term electricity supply.”