National Grid has given warning that there could be further sharp rises in electricity prices this winter amid mounting fears that Britain is facing a supply squeeze.

The power grid operator said that the loss of a number of key power stations for maintenance meant that the cushion of spare generating capacity is tight, particularly next month.

In an annual report intended to help big energy users to plan for winter, National Grid insisted that there would be enough power to meet overall demand. However, it noted that wholesale electricity prices might have to rise still higher from current record levels to encourage the operators of spare plants to bring on emergency capacity during peak demand periods.

“Provided the electricity market continues to make plant available in response to the appropriate price signals, demand should be able to be met in full, even in a harsh winter,” the report said.

With the forward price of electricity for delivery next month already trading near record highs of £132 per megawatt hour yesterday, Jeremy Nicholson, of the Energy Intensive Users Group, said that the warning was grim news for industrial consumers that buy power at wholesale prices.

Mr Nicholson said that some British factories could be forced to close next month because they simply could not afford to buy power. “There is a limit to what some businesses can stand and remain in business,” he said. “These prices are just staggering.”

Cement plants, brickmakers and glass factories are particularly vulnerable because they are already suffering from the housing market's collapse.

Retail consumers could eventually be affected by the rising wholesale prices too, although most of the big power suppliers have already promised to freeze prices until January.

Adding to concern about tight supplies next month, National Grid on Thursday cut its November power surplus forecast for the second time in a week. It trimmed it to 0.75 gigawatts for the week starting November 10, from earlier forecasts of 0.83 gigawatts. The cushion of spare capacity is normally more than ten times higher, at 10 gigawatts or more.

National Grid said that although it was confident that power supplies would be sufficient to avoid blackouts, it acknowledged that shortfalls could occur under certain circumstances.

An unexpected surge in demand because of a cold snap, combined with the unplanned loss of power plants for technical reasons, could force it to cut supplies to large customers or call on emergency supplies, such as pumped storage hydroelectric plants.

However, power traders said that National Grid's report played down the severity of the supply crunch facing Britain.

Stuart Lea, head of energy trading in Inenco, an energy consultancy, said: “There really is a potential big problem here. If National Grid is saying everything is OK, then why do we have extremely tight margins for November and why are prices at record highs? Their figures don't back up their rosy outlook.”

Thirty-three of Britain's 150 power stations were offline on Thursday, mostly for maintenance. They included three of British Energy's ageing nuclear plants.

National Grid's report was published amid renewed calls for a windfall tax on energy companies on Thursday after figures showed that a million more UK households slid into fuel poverty in 2006, spending more than a tenth of their income on fuel bills.

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