Government defends energy reforms

Reforms to the electricity market will reduce the impact of rising energy bills for consumers, the Government has claimed.

But critics said the measures to attract billions of pounds of investment to overhaul the UK's "creaking" energy system were skewed in favour of nuclear power and the "Big Six" energy firms at the expense of renewables.

The draft Energy Bill will introduce long-term contracts that pay a steady rate of return for energy over the lifetime of new low-carbon generators, to overcome the high capital cost of building nuclear power plants or offshore wind.

The Government hopes the reforms will deliver on cutting greenhouse gas emissions to tackle climate change, reduce consumer exposure to volatile gas prices and imports and lower the risk of black-outs as ageing power stations go offline.

The changes are designed to deliver the £110 billion which needs to be poured into power plants, wind farms and the grid over the next decade to bridge a looming energy gap - more than double the current rate of investment.

Around a fifth of electricity generation, mainly ageing coal-fired power stations, are set to close down in the next decade, while demand for electricity is expected to grow as it is increasingly used to power electric vehicles and heating systems.

Officials say energy bills are set to rise with or without reforms to the electricity market, largely due to increases in the price of fossil fuels such as gas, which has driven much of the recent hike in costs. But the Government claims the system of long-term contracts will mean bills are on average 4% lower a year over 20 years than they would be if the market is left as it is.

Energy Secretary Ed Davey said: "Leaving the electricity market as it is would not be in the national interest. If we don't secure investment in our energy infrastructure, we could see the lights going out, consumers hit by spiralling energy prices and dangerous climate change. These reforms will ensure we can keep the lights on, bills down and the air clean."

Labour Leader Ed Miliband backed the use of nuclear power as an important part of Britain's energy mix alongside renewables.

But he said: "Of course there needs to be investment in energy, but consumers need to know they're getting a good deal. I'm afraid what the Government has done so far is resist our plans to break up the way the big six energy companies work, to try and get prices to be better for consumers, and bring lower tariffs for the elderly. Yes, let's get the investment in but let's also get a better deal for consumers."


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