Member Article

Reforms in electricity market could cost businesses dearly

Many businesses are worried that they will not be able to stay in the UK if the reforms in the Energy White Paper are passed, according to the Telegraph.

The introduction of “feed-in tariffs” is popular with electricity companies as it will ensure producers of low-carbon electricity an agreed price, but many energy-intensive industries are already struggling and could be hit badly by price increases this would cause.

Chief executive of Drax, the giant coal-fired power station Dorothy Thompson believes the system: “provides the lowest-cost solution for the consumer and necessary stability for investors.

While the White paper has impose emission limits which will prevent companies from building new coal power stations, the standard does not prevent companies from building new gas-fired power stations.

Many were hoping that the White Paper would include a system which encouraged traditional energy suppliers to provide back-up power for renewable sources, but the Energy Secretary merely promised to report back on these ‘capacity mechanisms’ at the end of the year.

These proposals have come under much criticism, due to the lack of detail about tariffs and the lack of consideration of capacity mechanisms. John Cridland of the CBI commented: “We need a clear decision on both by the end of the year to avoid damaging investor confidence.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .