ENERGY; Blackouts put spotlight on security of supply worries.

The spate of blackouts that has hit the UK and Europe has made security of supply a key issue that will affect energy prices, according to consultancy Cap Gemini Ernst & Young (CGE&Y).

In its latest European survey examining the effects of deregulation on supply security and energy prices, CGE&Y said market players were responding to price signals and bringing plant online or mothballing it accordingly.

Jayesh Parmar, vice president for utilities market restructuring at CGE&Y, said: 'Recent events have emphasised the challenges of adjusting either supply or demand within a short period to respond to market conditions. Changes in the supply/demand balance can easily trigger large movements in prices.

'Given the economic and social disruption caused by blackouts, the challenge is to agree the appropriate level of margin to reduce the risks to acceptable levels, and to agree on how this level of margin should be paid for.'

CGE&Y senior vice president Colette Lewiner added: 'It is vital for regulators and players alike to learn from the experiences of recent summer months as Europe moves further towards full competition. As we approach the coming winter, the key ...