The truth about energy?

London – This week sees a further widening of the chasm between the Government’s view of the UK’s energy security and that being presented by industry and regulator Ofgem.

Measures in the Energy Bill will actulally reduce bills by 11% by 2020, according to energy secretary Ed Davey – citing figures from a new DECC report – while another minister reportedly described the country’s energy supply situation as “comfortable”.

These reassurances, however, are at complete odds with a continuing stream of warnings coming from industry – the latest from SSE which is cutting 15% of its power output due to new carbon emission charges, low profit margins and uncertainty around guaranteed payments to gas-fired power stations.

“It appears the Government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out,” said Ian Marchant, chief executive of SSE.

These comments reinforce a recent warning by Ofgem that the UK’s spare electricity capacity would drop from 14% today to 4% by 2015 – indeed, the regulator is now revising its warning as a result of the SSE closures.

This entire debate seems to revolve around whether or not the Energy Bill can set the conditions for the investment needed to keep the lights on. Ministerial flag-waving apart, there are few signs that it will.