Getting the Energy Bill right

Shadow Energy Minister, Tom Greatrex MP sets out in today’s Scotland on Sunday why the UK Government is not getting the Energy Bill right.  He says:

“The centrepiece of the government’s proposed Energy Bill is the contract for difference – designed as a way of providing long-term energy contracts, which should reduce the cost of capital investment and keep price increases down. But as we have heard recently from Ian Marchant, chief executive of SSE, and Keith Anderson of Scottish Power – there remain significant flaws, gaps and concerns in the proposals.”

He highlights the ongoing turf war between the Treasury and DECC as well as the failure to set a target for decarbonising the sector by 2030. All of this leads to uncertainty that is putting off investors, “This bill is the last chance to get right decisions that will impact on the next 30 years – without clarity and predictability, investors will back off or charge more. If we really want to minimise the impact on costs to consumers, then it is time to ­focus on getting this bill right for the long-term.”

His arguments are strengthened by Ian Marchant of SSE who said on Friday:

“Personally, I believe that when it comes to the energy retail market, Ofgem and DECC do not have a clear vision. They have good intentions, but there is no clear vision with no clear measures of success.”

The Government’s commitment to decarbonisation has also been questioned following cuts to CCS funding. Steven Vass in today’s Sunday Herald suggests that the Government spiked the Longannet project by refusing to act on the carbon tax consequences.

“A source very close to the project revealed last week that one of the main problems in the negotiations was the carbon price floor tax that became government policy after the Coalition came to power in May 2010. Despite the importance of CCS to the worldwide drive to reduce carbon emissions, it had become apparent to ScottishPower that, when the carbon price floor came into effect on April 1 of this year, it would make it liable to pay around £250m for the right to keep creating high levels of emissions in order to keep the Longannet plant open for the sake of the CCS project. It asked the Government for a waiver in the event that the scheme went ahead, but was told that this would not be possible.”

As parliamentary scrutiny of the Energy Bill starts in earnest this week, the Government clearly needs to sort out its strategy.

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