Industrial plants halted by `rip-off’ power prices

Heavy users of electricity were forced to stop or cut production for between six and eight hours on Tuesday after electricity pool prices reached record levels. The peak half-hourly price on Tuesday reached 15.5p/kWh compared with last year’s average of 2.57p/kWh. The steel, chemicals and cement industries were hit hardest. ICI’s chemicals site at Runcorn, […]

Heavy users of electricity were forced to stop or cut production for between six and eight hours on Tuesday after electricity pool prices reached record levels.

The peak half-hourly price on Tuesday reached 15.5p/kWh compared with last year’s average of 2.57p/kWh.

The steel, chemicals and cement industries were hit hardest. ICI’s chemicals site at Runcorn, the biggest single consumer in the UK, was forced to cut its requirement to less than half its 300MW maximum demand for the duration.

A spokesman said that at prices over 4p/kWh the company was paying for the privilege of producing chemicals. `We respond to pool prices and when they are high we shed load. These price hikes cost us money and affect the competitiveness of UK industry.’

Lisa Waters, economic adviser to the Energy Intensive Users Council, accused the big generators – National Power, PowerGen and Eastern – of raising prices unfairly.

`This is an outrageous rip-off,’ said Waters. `If it goes on much longer it will costs jobs and business.’

`In a competitive market, generators should be bidding at cost plus a reasonable rate of return,’ she said. `If the price goes up, then either their costs must have risen or their profits must be going up. But costs cannot be that high, because gas prices are some of the lowest we have seen at the moment.’

There is no mechanism at present for companies to seek compensation from the generators, even if the latter are shown to have manipulated prices to their advantage. `You’ve just got to take the hit,’ said Don McGarrigle, chairman of the electricity group on the Major Energy Users’ Council.

This week’s price hikes follow a series of `spikes’ in July, which prompted an investigation by the industry regulator Ofgem.

An Ofgem spokeswoman said the regulator would take no action until that investigation was completed later this month. However, she added: `Anything which raises prices to consumers is a problem. We regard price spikes as unacceptable.’

National Power blamed the high prices on long periods when low-priced generating plants were off line.

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