Questions of cost linger over EMR

Creating certainty for the future of the UK power market was the main of yesterday’s electricity market reform announcement. However, the question of cost was left hanging in the air […]

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By Tom Gibson

Creating certainty for the future of the UK power market was the main of yesterday’s electricity market reform announcement. However, the question of cost was left hanging in the air and many believe its one the Government has no answer to.

Dr John Constable, Head of Policy and Research at the Renewable Energy Foundation, a charity that promotes sustainable development believes the consumer will inevitable foot the bill. He said: “The question is if the new system will be any cheaper. Remember these things have to be sustainable in the long term. If the costs are not acceptable to the economy, it makes us uncompetitive, they won’t be sustainable and we won’t be on a low-carbon track.”

Yesterday’s new measures will favour low carbon technologies, in an attempt to accelerate Britain’s move towards a greener economy. Simon Bullock of Friends of the Earth was optimistic that prices might in fact fall.

He told ELN: “Overall I believe it’ll make it cheaper, it’ll bring bills down. The other big proposal we’re keen to see from the government is to help people reduce their bills through energy efficiency. More infrastructure will cost more but, investing in energy makes things cheaper as well. So on balance it should be more affordable for the consumer.”

Robert Groves, Chief Operating Officer of Smartest Energy, thinks differently: “If you are a consumer of electricity then your costs for electricity will definitely increase significantly. The government has neatly sidestepped the issue of whether this is a public subsidy or whether this is a cost that will be borne by the end user.”

These differences of opinion are just the start of the feed back process the government will have to undertake during the three month period of consultation. Dr John Constable thinks the UK needs to learn lessons from others nations in Europe.

He said: “The precedents in Europe are a little bit troubling. The tariff system in Spain has produced a very large tariff deficit with their government owing between 15-20 billion Euros. So we need to have an open mind, but there are clearly risks here and government money has to ultimately come from tax revenues.”