UK lawmakers criticise costly efforts to keep lights on

* Capacity margin was squeezed this winter

* Schemes to cut energy use, make capacity available introduced

* Schemes costly, relied heavily on fossil fuels - lawmakers (Adds government comment in final two paras)

By Nina Chestney

LONDON, March 12 (Reuters) - The British government's last-minute efforts to keep the lights on this winter after several power stations closed were costly and relied too heavily on fossil fuel power generation, a committee of lawmakers said on Thursday.

In a report, the House of Lords' Science and Technology Select Committee examined the resilience of Britain's electricity system after the capacity margin - the surplus of electricity generating capacity over demand - was reduced in the winter of 2014/15, prompting fears of blackouts.

"The government sailed too close to the wind, allowing the capacity margin, its safety net, to be squeezed too tightly before taking last-minute measures," Lord Selborne, chair of the committee, said in a statement.

"Moreover, these measures, which came at a cost to the taxpayer, were in conflict with the government's wider aims to decarbonise electricity generation."

To avoid an electricity crisis, National Grid (LSE: NG.L - news) introduced schemes which paid companies not to use electricity during peak hours and encouraged utilities to make idle capacity available.

The extra capacity has not actually been used so far this winter, partly because electricity demand has been falling since the financial crisis of 2007/8.

The schemes have provided an additional 1.1 gigawatt of capacity at a total cost of 31.75 million pounds ($48 million), according to National Grid data.

According to the government, the measures added less than 1 pound to the average household electricity bill in 2014-15, or less than 0.2 percent on an average bill of 586 pounds.

The committee said the government needs to do more long-term planning, assess whether it will ensure reliable power supplies in the future through its energy capacity market, and do further research into the true costs of electricity shortfalls.

It also said the government has to prepare more for the threat of cyber attacks on Britain's electricity network, which relies on computers, data and automation, making it vulnerable to disruption.

"This government has a plan to keep the lights on now and into the future," said a spokesman at the Department of Energy and Climate Change (DECC).

There has been over 45 billion pounds of investment in UK electricity generation networks between 2010 and 2013, according to DECC estimates, and there is a 860 million pound programme led by the Cabinet Office to increase Britain's cyber security.

The full committee report is available at: http://www.parliament.uk/business/committees/committees-a-z/lords-select/science-and-technology-committee/

($1 = 0.6646 pounds) (Editing by Hugh Lawson and Pravin Char)