Critics pan Britain's draft energy bill

May 25, 2012 at 6:10 AM   |   0 comments

LONDON, May 25 (UPI) -- The British government unveiled a draft energy bill this week critics say will raise prices and favors new gas-fired power plants over renewable sources.

British Energy Secretary Ed Davey published the draft law Tuesday amid negative reviews from energy companies, which predicted it will result in higher consumer prices by creating inefficiencies, and environmentalists, who panned it as not firmly committing Britain to renewable power generation.

Saying criticisms from "vested interests" were to be expected, Davey predicted the wide-ranging market reforms outlined in the draft would spur investments in both nuclear and renewable power generation, while offsetting consumer price increases with savings, The Telegraph reported.

"In this business there are lots of vested interests and some of them want a particular approach because it suits them best," Davey said, adding if everyone had been pleased by the proposals, bill payers "should be worried."

"You would expect parts of industry to be criticizing the government if the government is putting the interests of the consumer and wider economy first. So I'm pleased. ... I say, 'bring on that criticism,' because that suggests we have got it right."

The government claims that while the measure would result in an extra $157 per year in electricity bills by 2030, another $157 per year in price increases would be avoided through its implementation.

The creation of a complicated feed-in tariff system establishing fixed prices paid for low-carbon energy through long-term contracts was hailed by Davey as a way to spur investments in green energy.

But some energy companies criticized the measure for creating inefficiencies, especially with a new "capacity mechanism."

The mechanism is meant to enhance security of supply by offering fixed revenues to producers in exchange for them guaranteeing availability of their generation capacity for intermittent wind and solar production, thus avoiding sudden supply shortages and wholesale price spikes.

"We believe the introduction of a capacity mechanism will make the British energy sector highly inefficient, costing consumers many billions in unnecessary cost," RWE npower Chief Executive Volker Beckers said.

Environmentalists, meanwhile, said the proposals fail to firmly embrace the goal of de-carbonizing the power generation industry by 2030 and will instead create a "dash for gas" by OKing the building of gas-fired generators to replace Britain's aging coal-burning plants.

To meet emissions rules, these new plants would need to be outfitted with largely untested carbon capture and storage technologies.

"It's a shambles," Greenpeace Director John Sauven told the BBC. "The most important question is: 'What is the objective of this bill?'

"If your objective is to have a low- or zero-emission electricity sector, you need to have a strategy and that needs to be clearly stated. But the government isn't clear about it. The longer this disarray in policy lasts, the more likely it is that we get another dash for gas which will break all our CO2 targets."

They also contend the bill favors the nuclear energy industry by guaranteeing prices for it as well as for renewables through the contract scheme -- breaking earlier promises not to subsidize nuclear power.

But Davey denied the charge, saying the draft law would aid all forms of low-carbon generation on the way to meeting Britain's climate-change targets, The Guardian reported.

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