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Power blackouts could blight Britain unless the Government takes urgent action, the chairman of an influential House of Commons committee has warned.

"The concern that people have about prices will be a picnic compared with significant numbers of power cuts," said Peter Luff, chairman of the business and enterprise committee. "People could find they are watching the telly and suddenly it goes off for an hour or two. That possibility is real. It still can be avoided but we are losing time."

The committee published a report which warned new capacity to store gas and generate electricity must be created if a "disastrous" energy crunch is to be avoided.

The report, Energy Policy: Future Challenges, said difficult economic conditions make it less likely that energy companies will make the necessary investment to safeguard future supplies. It said "it is the Government's job to ensure security of supply" and urged a rethink of its faith in the market.

The committee said there is a "high risk" that energy companies will not be able to raise the money to replace capacity lost when old nuclear and coal-fired power stations are decommissioned.

"Generating capacity equivalent to nearly a third of current electricity demand will be made redundant by 2020. It will need to be replaced," the report said. "Just as the Government has been quick to respond to the crisis in the banking sector, it must now take action to ensure investment in new capacity takes place as planned.

"The situation is now very serious and we believe that a simple trust in the market's ability to deliver without any intervention will see us facing an 'energy crunch' in the medium term. The social and economic consequences of such a 'crunch' would be disastrous."

The report said gas storage capacity needs to grow "if the UK is to avoid falling victim to even higher levels of wholesale gas price volatility in the coming years". "We think it likely that the market will fail to deliver," the report concluded.

David Porter, chief executive of the Association of Electricity Producers, said: "We are fast approaching a 'generation gap' and about £100 billion needs to be spent on new and greener power stations. It is absolutely vital that the Government should always try to ensure that the UK is an attractive destination for investment in new energy infrastructure. If it fails to do that, the consequences could be dreadful."  continues here

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