British Energy’s plant shutdowns cause spike in electricity prices

British Energy announced yesterday that it had shut-down of several of its nuclear reactors after finding corrosion during routine inspections. The temporary closures, which will affect a quarter of British Energy’s nuclear-generated output, caused wholesale prices to leap by 17%. However, it is rising wholesale gas prices, not electricity, that present the real concern to consumers.

Karen Darby from SimplySwitch.com, the price comparison and switching service, comments: “This news is bound to cause concern for customers. However, those fearing higher electricity bills shouldn’t be too alarmed by this announcement. Spikes and troughs occur frequently in wholesale electricity prices and they’re normally absorbed by the energy suppliers. While British Energy hasn’t yet revealed how long the plants will be out of action, the shutdowns are likely to be temporary and should have little effect on long-term costs.

“What’s more worrying for customers, however, is that wholesale gas prices have started to creep up. With 70% of UK homes connected to the gas mains, and 40% of the UK’s electricity coming from gas, rising wholesale prices are bad news for the entire domestic energy market. Some analysts are predicting that energy prices will rise by the end of the year and we are seeing more and more customers enquiring about capped energy tariffs.

“Luckily, there are some highly competitive capped deals available. In the past, capped deals were cripplingly expensive, with customers paying way over the odds for their added peace of mind. Now, however, some capped tariffs are nearly as cheap as the UK’s best non-capped deals and have no penalties if the customer wishes to leave.”