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Davey attempts to calm fears for UK energy sector

At a meeting of the Confederation of British Industry (CBI) in London today, the UK‘s energy secretary Ed Davey attempted to alleviate concerns that the British coalition government’s division on energy policy is threatening the country’s energy future.

Mr Davey vowed to remove politics from energy policy: “Believe me when I say that no one would be happier to see the politics taken out of energy policy. What could make life easier for the Energy and Climate Change Secretary than political consensus? So I hear your message … and I can say with confidence that the coalition is united behind these energy market reforms.”

Ed Davey
The Liberal Democrat energy secretary was responding to an earlier assertion from the CBI’s Neil Bentley that the politicization of energy policy was damaging. Mr Bentley urged the coalition to ‘stop arguing and start attracting investment.”

Mr Davey told the gathering that the long awaited Energy Bill will be published in November as planned. There was concern that Mr Davey appeared to diverge from Prime Minister David Cameron‘s pledge to make energy firms charge the lowest tariff.

Speaking to the BBC earlier, the energy secretary confirmed he was working on a plan to require energy companies to inform customers of the lowest tariffs available, but did not mention the prime minister’s more radical proposal to force them to charge the lowest tariff.

It remains to be seen then, whether the government will compel energy firms to charge their cheapest tarrifs.

In a statement to PEI the Renewable Energy Agency (REA) said they were encouraged by Davey’s speech, but set out 10 key tasks to ensure Electricity Market Reform (EMR) can work for renewable power.

“The REA supports the intention to re-orientate the electricity system towards low carbon investment, but the new arrangements do not yet work for renewable power.”

“While the REA is pleased to see the Energy Secretary acknowledge the dangers of an investment hiatus, our members need a much longer term outlook than 15 months.”

Ener-G Director Andrew MacLellan, a member of the REA’s EMR working group, said:

“DECC must not think that publishing the Energy Bill will be sufficient to reassure investors and companies. It is essential that there is a good period of overlap between the RO and EMR if we are to avoid a long investment hiatus. This should be a high priority when we are facing a supply crunch and urgently need to secure good quality jobs.”

The forthcoming Energy Bill will include rules nuclear and renewable developers say they need to fund new power plants, in an effort to unlock investment for more generation, reports the FT.

Mr. Davey said he will publish the bill within the next month, allowing lawmakers to vote in Parliament before their Christmas recess. It will include a “capacity market” ensuring utilities are compensated for maintaining extra supplies and “contracts for difference” that benefit nuclear providers.

“We have listened to investors and today have set out further measures to provide the certainty they need to make decisions.”

With the proposed reforms not due to enter into force until 2014, Davey said he will seek powers to provide “comfort” to investors that want to make a decision in the next 15 months. Those include EDF SA (EDF), which wants to decide on a new nuclear plant at Hinkley Point, and about “half a dozen renewables developers for wind and biomass,” he said.

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