Government plans to revamp the electricity market could lead to higher bills, less competition and put off investors, MPs have said.
A cross-party Westminster committee fears the shake-up might fail to deliver change and called for an “urgent rethink” of ministers’ proposals.
The draft Energy Bill would create a system of long-term contracts to give power companies a guaranteed price for the low-carbon electricity they produce.
The move is intended to cut the risk of investment in expensive projects with high up-front costs, such as nuclear reactors and offshore wind farms.
But firms capable of building the infrastructure maybe be deterred because the Treasury will not underwrite new investment in nuclear and renewable power, the Commons Energy and Climate Change Select Committee warned.
Committee chairman Tim Yeo MP believed the coalition should use Britain’s AAA credit rating to guarantee risky schemes.
He said: “The Government is in danger of botching its plans to boost clean energy because the Treasury is refusing to back new contracts to deliver investment in nuclear, wind, wave and carbon capture and storage. Nobody wants to see a blank cheque written out for green energy, but the Government must provide investors with more certainty about exactly how much money will be available.”
The plans outlined in the draft Energy Bill form the biggest shake-up of the industry since privatisation in the 1980s and are designed to keep the lights on for decades to come. Ministers hope to reduce reliance on coal-fired power stations and imported energy, and boost support for renewable sources like wind, wave and solar, and carbon capture and storage.
Energy Secretary Ed Davey said: “The Energy Bill will enable us to make radical changes to the electricity market that deliver investment in secure, low carbon, affordable energy.
“We welcome the committee’s report and their recognition of the importance of this Bill. We are determined to use the pre-legislative scrutiny period to develop a robust and effective Bill with the interests of both consumers and investors at the heart. The committee’s input will be extremely valuable as we do this.”
|Wind Watch relies entirely
on User Funding