May 9, 2012
U.K.

Queen’s Speech: energy laws will send bills soaring

By Rowena Mason, Political Correspondent, The Telegraph, www.telegraph.co.uk 9 May 2012

Households will be made to pay for wind farms and nuclear power stations under a new Energy Bill that will force up electricity bills by around £200 a year.

The new laws revealed in the Queen’s Speech will bring in a raft of costly subsidies to help energy companies pay for “green” electricity.

British households will have to cover the cost of the subsidies through their energy bills over the next 20 years.

The Government said the main point of the new Energy Bill is to make electricity “secure, affordable and low-carbon”.

It will hand millions of pounds per year to energy companies in a subsidy called “capacity payments” simply for keeping their power stations open to back up wind farms.

Another subsidy called “contracts for difference” will artificially raise the price of electricity to make it worthwhile for companies to build nuclear power stations.

A third measure, known as the “emissions performance standard” will ban companies from building the most polluting coal stations.

Government estimates suggest the new subsidies will put an extra £205 a year on the average household electricity bill over the next 15 years.

It has predicted domestic electricity figures will rise from £477 per year to £682 per year by 2026.

The independent Committee on Climate Change says bills are likely to rise by £200 by the end of this decade, with half of this due to current green policies.

Ed Miliband, the leader of the Labour Party, accused the Government of making “an energy bill with nothing to help people struggling to make ends meet”.

Businesses are also concerned that rising electricity bills could make the recession worse by forcing them to move abroad.

John Walker, chairman of the Federation of Small Businesses, said more must be done to reduce energy bills.

“Whilst we accept there is a need to stimulate investment in a new a generation of nuclear power stations and renewable energy infrastructure, small businesses have been subject to a remorseless increase in energy costs,” he said. “It is essential that the reform of the electricity markets is accompanied by strong safeguards for consumers and measures to increase competition and break the dominance of the big six energy companies.”

Water bills are expected to fall for businesses and local councils under a different draft law in the Queen’s Speech.

The draft Water Bill will allow them to shop around and change their water company. However, households will still have no choice over which company supplies their water.