Rising bills unavoidable under energy reforms
By David Holmes on May 23, 2012
Energy and Climate Change Secretary Ed Davey has admitted that energy reforms will lead to an increase in energy bills for consumers. He said it just wasn’t possible to “turn back the tide” when it came to escalating energy prices.
Plans set out under the Government’s draft energy bill are expected to include a push towards nuclear energy, with policies designed to favour low carbon power, of which the nuclear industry is likely to be one of the big winners.
Under the long awaited draft energy bill, plans which are designed to help the UK “keep the lights on” will be published, alongside climate change targets. The aim of the proposals is to secure investment in the generation of clean energy. With a number of power stations set to be decommissioned having reached the end of their natural life, finding a way to avoid what could potentially be a looming gap in energy supplies is a high priority.
But as a consequence of these planned reforms to the energy market, ministers have admitted that energy consumers would end up with higher bills. Speaking on BBC Radio 4’s Today show, Mr Davey said:
“We are extremely concerned about consumer bills. We can’t turn back the tide because global gas prices are having upward pressures – we can’t stop that. What we can do is try to insulate the UK economy. If we didn’t make these changes, bills would be £200 higher.”
Newly published figures show that households could pay as much as £100 more for electricity by 2030. So these necessary reforms, say Davey, will keep the lights on, cut bills and keep the air clean.
Mr Davey added that over the course of the next ten years some £110 billion of investment is required to keep the lights on in the UK. That figure, slightly down on the original figure of £120 billion, is what is needed to meet the EU climate change target of 2020 which requires a 20% reduction in emissions through renewable energy production.
“What our reforms today do is they try to keep the lights on through energy security and getting investment in infrastructure and they get the carbon transition we need to hit our climate change targets and get to clean energy, and we need to do that at the most affordable way for the consumer,” the Energy and Climate Change Secretary said.
The new policy will also focus heavily on gas. Compared to renewable energy offshore wind farms for example are not being built fast enough and therefore can’t be relied upon to close the potential energy gap between supply and demand. In contrast, gas-fired power stations can be built relatively cheaply and quickly.
While the likes of EDF, Scottish Power and E.ON welcomed the proposals, smaller renewable companies such a Good Energy were quick to voice their concern, saying the draft energy bill risked “skewing the market towards nuclear and the ‘Big Six’.”
Green campaigners believe that a new “dash for gas” would leave energy consumers hooked on what is increasingly become an expensive fossil fuel. Given that our North Sea supplies of natural gas are depleting at a rapid rate, the UK risks becoming heavily dependent on importing fuel which is expensive and makes us vulnerable to global rising energy prices.
Commented Davey: “By reforming the market, we can ensure security of supply for the long term, reduce the volatility of energy bills by reducing our reliance on imported gas and oil, and meet our climate change goals by largely decarbonising the power sector during the 2030s.”
But before it appears as a fully fledged bill this autumn, the draft energy bill will need to be scrutinised by Parliament.