National Grid Chief Says Power Forecast Shouldn't Cause `Panic'

By Paul Dobson

Oct. 8 (Bloomberg) -- National Grid Plc Chief Executive Officer Steve Holliday said record-high U.K. power prices for November and forecasts for reduced surplus generation capacity shouldn't cause concern that supplies may be cut.

Extended maintenance at coal-fired and nuclear stations this year has lowered available capacity, meaning costlier reserve generation is required to satisfy demand. National Grid, Britain's power-transmission network manager, cut forecasts for surplus production in November the last two weeks.

``This is just the system working, actually, and we shouldn't panic about it,'' Holliday said in an interview in London yesterday. ``If generation doesn't come back and we do get a cold spell and we're into insufficient margin territory,'' the grid will issue a warning notice.


If that doesn't work, ``we then have another layer of safety and then finally we've got other responses, way before we actually get into a demand problem,'' he said.

November baseload power, the contract for around-the-clock supplies, rose 11 percent yesterday to 150.50 pounds ($264) a megawatt-hour, the highest ever price for a one-month contract. It fell 5 percent today to 143 pounds a megawatt hour as of 12:30 p.m. local time.

The system of forecasts and warnings National Grid provides ``is all about making sure we've got enough safety cushion over and above the forecast peak demand,'' Holliday said.

National Grid said on May 27, when the shutdown of British Energy Group Plc's 1,200-megawatt Sizewell-B power plant caused supply interruptions in parts of England, that steps to reduce demand were imminent because of insufficient spare supplies. It was the first such notice since 2006.

``The normal market signals will get more power stations online as necessary,'' Laura Schmidt, a spokeswoman for the U.K. Association of Electricity Producers, said yesterday.

Utilities are preparing plants for the winter. E.ON AG's U.K. unit has stocked up on coal supplies, checked plants are able to run on back-up distillate fuel and prepared an oil-fired plant that only runs at times of peak demand, spokeswoman Emily Highmore said yesterday.

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net