Electricity Market Reform White Paper May Force Businesses Out Of UK
There are concerns that the new Electricity Market Reform White paper could mean businesses have to leave the UK.
Businesses are concerned that new rules which will be introduced as a result of the White Paper that will increase energy bills to such an extent that they are forced out of the country.
According to the director-general of the CBI, John Cridland, “Some energy intensive industries are already on a knife edge, and without help to shield them from new measures like the carbon floor, they could struggle to stay in the UK”.
Everyone is struggling with rising energy bills at the moment but especially small businesses. British Gas and ScottishPower have already increased prices recently and it’s expected that the rest will follow suit. While business electricity prices and business gas tariffs have in some cases fallen slightly over recent weeks, it is expected that prices will continue to rise as whoesale energy prices remain high.
As part of the White Paper, feed-in tariffs will ensure that those generating low carbon electricity will get an agreed price. If wholesale electricity prices go above that agreed price then generators will pay money back to the government.
The reforms aim to make investment in sources of renewable energy and new nuclear power plants an attractive proposition. Around £110 billion is needed, according to the government, for investment to replace old power stations and to move to a low carbon economy.
Mr Cridland said there was lack of detail in the White Paper. He said “More detail is needed on tariffs, and the case must be made for capacity mechanism. We need a clear decision on both by the end of the year to avoid damaging investor confidence”.
The White paper also includes standard limiting emissions from new power stations. These have been set at such a level that they prevent energy companies from building new coal fired power stations without carbon capture technology but don’t prevent new gas fired power stations from being built.
Mr Huhne, the Energy Secretary said “We do not want new coal plants; we do want new gas plants. We believe gas will have a continued role in the security of supply and a longer term role in balancing the system”.
Until further details are made available it’s unclear how the Electricity Market Reform White Paper will affect businesses. Mr Huhne says that the reforms will help to stabilise energy prices and that without these changes both domestic and business electricity prices and gas prices will be at the mercy of volatile wholesale markets. But obviously businesses will be keen to learn how the reforms will affect them so that they can plan for the future.