Government’s Energy Bill still has ‘room to improve’

The Energy and Climate Change Committee welcomed the Government’s proposals for the Energy Bill but said there is “still room for improvement”. Energy Secretary Ed Davey announced the full details […]

Register now!

By Priyanka Shrestha

The Energy and Climate Change Committee welcomed the Government’s proposals for the Energy Bill but said there is “still room for improvement”.

Energy Secretary Ed Davey announced the full details of the Bill yesterday and confirmed the decision to have a single counterparty for its Contracts for Difference (CfD) mechanism. This is expected to provide incentives for businesses to invest in low-carbon generation.

Tim Yeo MP, Chairman of the Committee said more needs to be done to offer the best deal for customers: “I am pleased that Ministers have seen sense on having a single counterparty to guarantee new energy contracts, but if the Treasury wants to deliver the best deal for consumers it should use the Government’s triple AAA rating to back the contracts directly. This would lower the risk for investors and reduce capital costs, keeping the overall bill for energy investment down.”

The Government also introduced a Capacity Market, which DECC said would ensure there is sufficient gas generation to provide “backup” during future supply shortages.

Environmental group Friends of the Earth said this would hike energy bills for consumers, contrary to what Ed Davey insisted. Executive Director Andy Atkins said: “This Energy Bill will lock the nation into increasingly expensive gas, condemn cash-strapped households to rising fuel bills and threatens the nation’s targets for tackling climate change.

“Ministers must nail the lie that green policies are behind soaring fuel bills – it’s the rocketing price of gas that’s overwhelmingly responsible for the misery inflicted on consumers. MPs must support an amendment for a decarbonisation target to give businesses confidence to invest in clean energy to deliver new jobs and investment and a power system we can all afford.”

UK engineers added the Government’s delay in setting a carbon reduction target for the power sector would lead to a dash for gas and therefore increase bills.

Alistair Smith, Chair of the Institution of Mechanical Engineers’ Power Division said: “In the absence of this clear target we will likely see a ‘dash for (unabated) gas’ and it effectively removes any legislative incentive to develop Carbon and Capture and Storage technology for gas-fired powered stations in the medium-term.

“What is clear is that whatever technologies the UK ends up relying on to meet energy demand, energy prices are set to rise. The UK has enjoyed 20 years of cheap energy which has lead to complacent energy use. People must adjust to the fact that if they want to keep energy costs down they must adjust their behaviour.”