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We should have fixed it even if it wasn't broke

23 February 2010

A couple of reports this week have highlighted some dramatic problems in our electricity supply system. Having investigated the state and evolution of the electricity network (high and low voltage), MPs on the select committee on Energy and Climate Change (ECC) found failure after failure. There were flaws in trading arrangements and a sad lack of agreement on transmission access reform. The current framework for investment means low-cost options can be overlooked. There is no "culture of innovation" in the networks.
Meanwhile, Ofgem's investigation into liquidity in the electricity market had an outcome that probably surprised no-one: there isn't enough, and it is holding back small and independent generators. If the introduction of a couple of new trading platforms doesn't crack open the market, Ofgem has threatened everything from a trading obligation to capacity auctions.
It is clear that our system is creaking at the seams, unable to stand the stresses placed on it. They are all well known: new forms of generation, changes in supply and demand options, the need to get new entrants into the system and many more.
The problem is that on some measures our system has worked well for many years. Our networks are highly reliable. Outages are few and domestic and commercial customers have come to expect high performance. Some output measures look great. That's why network operators have taken the cautious approach that the MPs now decry.
Other output measures? Not so good. For example, generation customers waiting to connect would argue, rightly, that they have been badly served.
The ECC report shows just how difficult it will be to square this circle. It says that network companies must have minimal regulatory and policy uncertainty and that the government must set in place a long-term strategy - but the industry must not be locked into one particular outcome.
When the status quo works - and ours has, for lots of people and for a long time - it's hard to argue that we should step out of the comfort zone. That's why we haven't gone far in that potentially risky direction.
Politicians as much as anyone are at fault, for suggesting that we can make massive changes to our system without any impact on or risk for customers. Otherwise, they would not have skated quite so quickly over difficult questions such as whether the switch to renewables will be costly, or whether we can change to a low-carbon economy without making changes to our lifestyles.
We have had a transmission and distribution system that worked well, and one that had a good outcome for many consumers - and voters. So we left it in place - politicians because no-one wants to suggest that there are tricky times ahead and engineers because on many measures they could be proud of what they had achieved. The message was: it's not broken.
In fact, we should have acknowledged that our system was living on borrowed time and started preparing long ago to replace it. Equally, we should have warned customers that the outcome may mean changes for them. Higher costs, more wires, more faults and more complexity may all be on the agenda. In balancing outcomes across a broader range of customers, some will surely complain that their service has got worse. We need to bite the bullet.
Source: Disconnector

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