Energy Bill aims to keep lights on and air clean

The reforms published in the draft Energy Bill are designed to provide investors with transparency, longevity and certainty to attract £110bn of low-carbon power generation, the Department of Energy and Climate Change said.

Energy Secretary Ed Davey said leaving the electricity market as it was currently would not be in the national interest. “These reforms will ensure we can keep the lights on, bills down and the air clean.

“The reforms will also be better for the economy, leaving us less vulnerable to rising global energy prices and supporting as many as 250,000 jobs in the energy sector. 

“By reforming the market, we can ensure security of supply for the long-term, reduce the volatility of energy bills by reducing our reliance on imported gas and oil, and meet our climate change goals by largely decarbonising the power sector during the 2030s,” Davey said.

The energy Bill – announced in the Queen's Speech earlier this month – is expected to reform the electricity market with long-term contracts that pay a steady rate of return for energy over the lifetime of new low-carbon generators. It will also introduce an emissions performance standard to prevent construction of new coal plants which produce too much carbon dioxide.

The Institution of Engineering and Technology (IET) welcomed the Bill as it said it was urgently required to meet the challenges of energy security, affordability and climate change, but called for the government to do more to encourage the reduction of electricity usage.

Robert Sansom of the IET said: “We are surprised that no reference is made to demand in the announcement made today. Support for low carbon generation will inevitably result in higher prices for consumers, but these price increases can be offset by improvements in energy efficiency, thereby reducing energy consumption, which is also better for the environment.  In addition demand has a crucial role to play in reducing the amount of capacity required.  The reforms to the electricity market must recognise this role and ensure incentives are available to reward customers accordingly.”

Consumer Focus director of energy Audrey Gallacher said the government had a “difficult and complicated challenge ahead of it in getting the Energy Bill right”.

"It must walk a fine line between balancing the need to make our energy supply more secure and meet our green targets, while ensuring energy remains affordable for customers today and tomorrow.”