A new Energy Bill was introduced in Parliament last week.
The Bill has been designed with two objectives in mind: (1) protect
vulnerable households; (2) develop carbon capture and storage (CCS) technology.
(1) Protect vulnerable households
The Bill contains the following measures to protect vulnerable households:
(a) Mandatory social price support (including electricity bill
This provision builds on the success of the voluntary agreement with energy
companies, which ends in 2011 and has helped reduce the fuel bills of more than
one million vulnerable customer accounts.
NB. The level of support to be provided through the new mandated scheme
will be greater than the £150m committed by suppliers in the final year of the
(b) Additional powers & responsibilities for Ofgem
The Bill requires Ofgem, the energy market regulator, to:
(i) include the reduction of carbon emissions and the delivery of secure
energy supplies in their assessment of the interests of consumers;
(ii) step in proactively to protect consumers as well as considering longer
term actions to promote competition.
It also gives Ofgem additional powers to tackle market exploitation where
companies might take advantage of constraints in the electricity transmission
And it strengthens the deterrent nature of Ofgem’s powers by extending the
time limit from 12 months to 5 years within which Ofgem can impose financial
penalties for breaches of licence conditions.
(2) Develop CCS technology
The Bill contains the following provisions to increase UK competitiveness in
this emerging field:
(a) CCS Incentive
The new CCS Incentive will support the construction of up to four
commercial-scale CCS demonstration projects in the UK.
The Incentive could also provide funding for the retrofit of demonstration
projects to their full capacity, should it be required in the future.
(b) Clean coal
The Bill will also strengthen the UK’s leadership position in the development
of clean coal technologies, which could bring between £2-4 billion a year into
the UK economy by 2030 and support between 30,000-60,000 jobs in fields such as
engineering, manufacturing and procurement.
Energy and Climate Change Secretary Ed Miliband said:
“The new Energy Bill is an example of the Government taking direct action to
ensure the markets work fairly and to help more of the most vulnerable with
their fuel bills. It will ensure that consumers can be confident that British
energy is sustainable and secure. Making the transition to a low carbon economy
will be a challenge but this Bill will allow us to put in place key powers which
will help us make the shift fairer for all.”
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