Electricity rises hit factory production

Steel and chemical factories are being forced to shut down production for up to two hours at a time to avoid big hikes in the price of electricity. Big industrial users that buy electricity from the electricity pool said they had no option but to turn machinery off during price `spikes’, when electricity can cost […]

Steel and chemical factories are being forced to shut down production for up to two hours at a time to avoid big hikes in the price of electricity.

Big industrial users that buy electricity from the electricity pool said they had no option but to turn machinery off during price `spikes’, when electricity can cost up to five times its normal price. `Our production is being influenced by spiking,’ said an ICI spokesman.

While the steel and chemical industries are the principal victims, the Energy Intensive Users Group (EIUG) said the problem was much more widespread.

The industrial users say that so far in July, pool prices have been virtually double the 2.57p/kWh they averaged over the whole of last year. On 13 July, for example, the average for the day was 5.8p/kWh, with a peak half-hourly price of 15p recorded at 11.30am.

National Power, one of the generators criticised by the users, said the higher prices reflected the loss of about 5GW of nuclear capacity from the pool, due to plants being shut for maintenance for longer than expected. Bringing little-used plant on to the system to compensate had raised the prices as generators sought to compensate for their limited operation.

The EIUG and other lobby groups have complained to regulator Ofgem that the price increases are not cost-related and are damaging their competitiveness.

`It is quite unacceptable that generation prices are increased at the time of year when demand is lowest,’ said Rodney Brooke, chairman of the National Electricity Consumers’ Council. Ofgem said it has begun an investigation.