A Tory MP criticised the Liberal Democrat Energy Secretary yesterday after he announced new green energy projects that will lead to higher bills.
Ed Davey said the five new offshore wind farms and three wood-burning plants would supply 2million homes, create 8,500 jobs and attract £12billion of private investment.
But he was accused of exploiting the crisis in Ukraine, which he said highlighted the need to develop home-grown power, as a ‘cover’ for expensive projects.
Investors get a guaranteed price for the electricity they produce – around double the wholesale cost – some of which is added on to consumer electricity bills.
Mr Davey said the average bill increase would be £11 a year by 2020 – a 2 per cent rise – but insisted green energy would make power more affordable in the long term.
However, the Renewable Energy Foundation think-tank and a source at one of the major electricity suppliers calculated the rise in bills from these projects would be around £20.
Britain sources less than 1 per cent of its gas directly from Russia but, at peak times, gas of Russian origin is imported from countries such as Germany.
It comes to Europe via a pipeline through Ukraine.
Mr Davey has accused Russia of ‘holding the West to ransom’ by threatening to increase its gas prices, and warned that Britain has to produce its own supply.
Peter Lilley, a Tory member of the Energy and Climate Change Committee, suggested the comments provided ‘a bit of collateral cover’ for putting up prices.
The former trade minister said the rise was unacceptable for a single round of new contracts.
He said: ‘If you just add 2 per cent to bills, and the next batch adds 2 per cent, and so on, it soon adds up to what Labour might call a cost-of-living crisis.
‘Clearly Europe as whole needs to become less dependent on Russian gas, but we need more of our own capacity, which will bring down costs. The way to do this is perhaps to go ahead with fracking.’
In an embarrassment for the Energy Secretary, the Drax power station in North Yorkshire, where one of the new projects is based, has announced plans to sue his department.
Only one of the two plants that it anticipated would be converted from coal to wood-chip was announced, and the firm’s shares fell by 13 per cent.
A spokesman said it would make a legal challenge.
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