The Energy Bill was introduced to the House of Commons by the Secretary of State for Energy and Climate Change Ed Davey on Thursday, November 29th 2012. The bill is part of the government’s aim of attracting £110bn of investment into the energy sector and creating a low-carbon economy. But what impact does the Energy Bill have for businesses in the UK, and will that impact be positive or negative, asks company formations and corporate support firm London Registrars?
While there is concern that the drive towards low-carbon power will result in higher energy bills for British business (as well as for households), Ed Davey denies this, saying, “Energy-efficiency savings are set to outweigh…the cost of supporting low-carbon electricity generation…The net effect of government policies on energy bills is downwards not upwards”.
Part of the Energy Bill, ‘contracts for difference’, will see investors in nuclear power and renewable energy compensated if the market price of electricity drops below a ‘strike price’ set by the government (a price which will not be published until next year). Generators will pay the difference back to consumers should prices rise above that set level. In a vital note for some British businesses, the cost of ‘contracts for difference’ will be exempt for those in energy-intensive industries such as manufacturing.
For those businesses not in energy-intensive industries, however, it is perhaps too soon to judge whether Ed Davey’s claim that energy costs will fall and not rise once the Energy Bill comes into force is accurate.