Electricity supplies to people’s houses could be disrupted if the country runs short of gas.
The UK is facing “a significant risk” of gas shortages this winter, according to the industry regulator, which could impact electricity supplies.
Ofgem said due to Russia’s war with Ukraine, there is a possibility the UK could enter a “gas supply emergency”.
This would lead to supplies being cut to power stations which use gas to generate the country’s electricity.
It places firms at risk of running out of money because of huge charges they pay if they cannot deliver electricity.
Ofgem wrote a letter in response to SSE, which operates four gas-fired power stations in the UK which produce electricity.
SSE is concerned that operators of gas-fired power stations faces millions of pounds worth of penalties if it is unable to fulfil promises to supply electricity “caused by events outside their control”.
Ofgem said: “Due to the war in Ukraine and gas shortages in Europe, there is a significant risk that gas shortages could occur during the winter 2022-23 in Great Britain. As a result, there is a possibility that Great Britain could enter into a gas supply emergency.”
If this happens, supplies would be cut to “the largest gas users” which will likely be “large gas-fired power stations which produce electricity to the National Electricity Transmission System”.
In the event electricity supplies are disrupted, generators would have to pay what are known as “imbalance charges”. These cover the cost of National Grid having to find electricity from elsewhere to meet demand.
Ofgem said this “could result in potential insolvency of gas-fired generators if a gas supply emergency occurs”.
The Times, which first reported the letter, said that an averaged-sized power station could face charges of around £276m a day if it is unable to generate electricity. This could rise to £475m for a larger plant.
In its letter, Ofgem said it would look at the issue of charges as a matter of urgency because it will have a “significant impact on the safety and security of the electricity system”.
SSE said that by raising the issue with Ofgem it “would protect security of supply by ensuring gas-fired power stations are able to provide vital flexible generation through challenging periods”.
A spokesperson said: “There is broad industry agreement on the need to examine this issue, with the decision ultimately one for Ofgem.”
Since its initial invasion of Ukraine, the Kremlin has reduced energy supplies to Europe while many countries have pledged to shift their reliance for oil and gas away from Russia.
While the UK does not rely on Russia for oil and gas, any disruption causes a widespread impact on international supplies.
Most recently, leaks were discovered at Russia’s two main gas pipelines to Germany, Nord Stream 1 and Nord Stream 2. Though neither were operational, the EU, US and Nato suggested the damage was intentional. Russia has denied any involvement.