Energy firms must secure gas supplies

6 August 2009

07 August 2009 | Jake Kanter

UK utility firms should lock in long-term fixed contracts for gas supplies to prevent energy shortages, says a government energy expert.

Malcolm Wicks, the prime minister's special representative on international energy, made the recommendation in his report Energy Security: a national challenge in a changing world.

It said the government should be informed about energy firms' contractual agreements for gas imports so it can help maintain the UK's energy security and mitigate price volatility.

"While the details of contracts are obscure, I heard during my review that there had been a trend away from longer-term, fixed volume contracts by UK importers," Wicks said. "I am concerned this could leave the UK vulnerable, exposing it to increased price volatility and potentially preventing it physically receiving the gas needed to meet demand, especially during very harsh winters."

The report said it would be "advantageous" to the security of gas supplies if the government helped energy firms put in place long-term, fixed-volume contracts.

Wicks said this is particularly important because the UK has become "significantly dependent" on gas imports. He added that the government and energy companies should work to increase gas storage to help the country respond in energy emergencies such as difficult winters.

British Prime Minister Gordon Brown said: "The ability to maximise domestic energy reserves and establish home grown energy sources is vital."

SMaug2009

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