27 March 2003 – Industry has saved over £1.8bn ($2.8bn) on the cost of electricity since a forward power market was introduced two years ago today, the UK energy regulator Ofgem says. In a staunch defence of Neta, which many industry professionals regard as overly competitive, Ofgem said that the system has been a boost to business competitiveness.
Ofgem’s Chief Executive, Callum McCarthy, said, “Today marks the second anniversary of the introduction of the new electricity wholesale market, which has helped increase the competitiveness of business in England and Wales by delivering over £1.8bn in lower electricity prices.”
“Over two thirds of all electricity generated is used by industry, business and public bodies, such hospitals and schools, and they have all directly benefited from a 40 per cent fall in electricity wholesale prices since 1998.
“Business had suffered in the 1990s from artificially high prices under the previous Electricity Pool even at a time when costs of generating electricity were falling. Now over 98 per cent of electricity is traded in an open market, where stronger competition and an over capacity of generation has seen prices fall.”
Ofgem also called on domestic customers to mark the anniversary by switching supplier. It said that domestic customers can save up to £50 on their electricity bill by joining the 90 000 people, who are switching their electricity supplier every week.
Electricity Group Chairman of the Major Energy Users Council, Hugh Conway said, “The electricity wholesale market has been a success for DTI and Ofgem and has delivered competitive electricity prices to UK industry and commerce for the first time in many years. At long last, UK wholesale prices have become competitive with but no lower than those in mainland Europe.”
The reforms to the wholesale market were brought in by the New Electricity Trading Arrangements project, which went live on 27 March 2001. The drop in wholesale power prices has left much of the UK’s power struggling to cover costs which has led to a reduction in available capacity. It has also brought nuclear generator British Energy to its knees and reliant on a government rescue package. Other critics include renewable power producers who have fought for more recognition within the system for intermittent power generators.