Essential legislation to power low-carbon economic growth, to protect consumers, and to keep the lights on was introduced to Parliament by Edward Davey today.
Following extensive consultation and pre-legislative scrutiny, the Bill sets out radical reforms to the design of the electricity market that will kick-start a renaissance in construction of low-carbon energy infrastructure and in low-carbon manufacturing supply-chains.
The Energy and Climate Change Secretary said:
“The Energy Bill will attract investment to bring about a once in a generation transformation of our electricity market, moving from predominantly a fossil-fuel to a diverse low-carbon generation mix.
“This is the culmination of two years’ work in designing a new market-based approach that will deliver certainty for investors and fairness for consumers.
“The challenge is big. Over the next decade, the investment needed to upgrade our energy infrastructure is almost half of the infrastructure investment needed in the UK. This is far more than is taking place in transport, in telecoms, or in water, and dwarfs the investment that was needed for the Olympics or Crossrail.
“The Bill will support the construction of a diverse mix of renewables, new nuclear, gas and CCS, protecting our economy from energy shortfalls and significantly decarbonising our electricity supply by the 2030s as part of global efforts to tackle climate change.
“This is an economic opportunity – there for the taking. It will stimulate supply chains and support jobs in every part of the country, capitalising on our engineering prowess and our natural resources, cementing the UK’s place at the forefront of clean energy development.
“In an era of rising global energy prices, by shifting to more home grown sources of power and by becoming more energy efficient, we can cushion our economy and households from the fluctuations of world gas markets. We intend to underpin this with reforms to the retail market to simplify tariffs and make sure consumers are able to get the best deal for them.”
Oversight of the nuclear industry will be enhanced through creating an independent statutory nuclear regulator, the Office for Nuclear Regulation.
Ofgem’s role will be better aligned with Government priorities and strengthened to safeguard consumers. As part of this, energy companies will be required to pay compensation to consumers as well as to the regulator Ofgem.
During the passage of the Bill, proposals will be added to ensure energy companies help consumers to get on the best energy tariff, and to promote energy efficiency through electricity demand reduction.
Government will also take powers to set a decarbonisation range for the power sector for 2030, a decision to exercise this power will be taken once the Climate Change Committee has provided advice in 2016 on the fifth Carbon Budget, which covers the corresponding period (2028 – 2033).
Government’s energy policy, set out in the Annual Energy Statement published today will help keep bills down in future, with current analysis showing that the average household bill will be 7% or £94 lower in 2020 than it would be without low-carbon energy policies being pursued .
To further safeguard the competitiveness of Energy Intensive Industries (EIIs) that are particularly exposed to energy costs, Government has agreed to exempt some EIIs from any additional costs arising from the contracts for difference. This proposed exemption will ensure the UK retains the industrial capacity to deliver a low carbon economy. The exemption will be subject to State Aid clearance from the European Commission.
The Bill outlines reforms to the electricity market to attract record investment:
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Press release, November 29, 2012; Image: decc