Alistair Buchanan: From power crises to surging prices, he'll take the heat out of anything

Unless it's 1963 all over again, the lights won't go out this winter. Take it from the energy watchdog
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His reassurances are timely. On Tuesday, the Met Office predicted that this winter would be colder than average. That followed the forecast from National Grid earlier this month warning that there was only 11 days gas supply, which Buchanan calls a "very sober report".

This former chartered accountant and utilities analyst is a sensible man. After providing his glad tidings on the turkey, he quickly adds the rider that "a regulator can never give anyone a guarantee they won't be cut off, because for instance you might have a network failure". And, he notes, the energy supply to households would be at risk only if there was a "one in 50" severe winter, last seen in 1963.

He also won't be drawn on whether we should build more nuclear power stations, a hot topic fuelled by Tony Blair's comments earlier this month that a decision would have to be made by the end of next year. "It's not for me to comment. Our position on nuclear is that it is a generation type. We just don't go there. I'm starting to sound like a broken record," he adds in apology.

But as well as saying all the sensible things that regulators need to, he is prone to bouts of excitement: a scribbled graph showing gas prices here, a diagram on gas supply there. And he certainly didn't join Ofgem for a quiet life.

Quite the opposite. "One of the reasons the job was so attractive to me, looking out to the regulatory and market remit we have, was that it was clear we were reaching a series of crossroads. I knew it was not going to be dull. The supply/demand side could be quite interesting going forward." Translating the regulator speak, this could mean something like, "bring it on".

That is not to say he is glib about electricity and gas prices. Domestic utility bills have increased by around a fifth over the past 18 months for households and will rise further. Fuel costs for businesses have gone up even more on the back of high oil prices and a shortage of gas to the UK, which has pushed gas prices for this winter up by almost half compared to last year. "It is very uncomfortable for industry. I take no pleasure in seeing industry in the situation that it is," he says. "But our remit from a positive point of view is to say: 'Look, consumer, it is extremely unfortunate that your bill is going up. How can you try and ameliorate that?' "

He mentions one unnamed steel manufacturer that he knows who is planning to shut down production this winter. After a process of elimination, it turns out that this is the Kent-based Thames Steel. Its finance director, Saeed Khan, tells The Independent on Sunday that it has suspended production for three months mainly to fit a new rolling mill, but he confirms this is also partly down to soaring energy prices. "They are killing us," he says, which isn't surprising as fuel costs account for around 15 per cent of total overheads. The jobs of its 170 staff are not at risk now, he adds, but it may be a different story in a year's time if the company's Saudi owner loses patience.

This is an extreme example. Mr Buchanan says most companies have opted to cut their fuel bills by signing cheaper interruptible supply contracts, which means that in the event of an energy squeeze, supplies are diverted to households instead. But these deals are signed most years. The question for business this winter is whether the interruptions will be triggered, and that depends on the weather. "The National Grid report does highlight that industry in severe conditions would be taking the strain," he admits.

As part of Ofgem's remit to protect the consumer, it is Mr Buchanan's job to ensure competition in the market. His advice could soon be called on if German energy group E.ON follows up its declared interest in Scottish Power with a firm takeover bid. Centrica has also been the subject of takeover speculation. If either company is swallowed up, the number of energy suppliers would fall from six to five - something that could be blocked by the competition authorities. Mr Buchanan's recommendation could tip the balance either way.

He says, though, that the City is wrong to try to second-guess him on this. "It was suggested it was common knowledge that Ofgem would allow six to five and would stop at five. I had to clarify we have made no such statement."

The walls of his Westminster office are covered by maps of continental gas and electricity pipelines, giving the impression he may be plotting a regulatory conquest of Europe. He could be forgiven if such a plot existed, for 10 EU member states have still not complied with liberalisation directives. But Buchanan is strangely relaxed about this, despite evidence that a closed energy market on the Continent means higher prices here. "The UK has to respect and understand how long it took us to liberalise. It can be easy for us to say to Europe, 'come on, get on with it', but it has taken 15 years for us to get to where we are. But we are keen to help Europe to liberalise as fast as possible."

You get the sense that, privately, he may feel more strongly. But he wouldn't say so. "We are not elected politicians. You have to stay within the rules."

So to all those consumers saddled with huge fuel bills, he's doing his best to help. Just don't expect him to cook your turkey.

BIOGRAPHY

BORN 22 December 1961

EDUCATION BA in politics at Durham University.

CAREER

1983-87: chartered accountant at KPMG.

1987-94: analyst, Smith New Court.

1994-97: head of research, BZW.

1997-99: head of utilities research, Salomon Smith Barney.

1999-2001: head of European utilities research, DLJ.

2001-03: head of European utilities research, ABN Amro.

2003 to now: chief executive, Ofgem.

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