Industry responds to Helm review

Proposal for industry exemption from low carbon levies ‘half baked,’ says green group

The Helm review’s proposal that industry should be exempted from low carbon energy levies has been slammed as ‘’half baked’ by environmentalists.

In its response to Professor Dieter Helm’s government-sponsored review of energy costs, published today (Octonber 25), the Green Alliance’s policy director, Dustin Benton, said: “The proposal to exempt industry, but not households, from paying for clean energy is half baked.

“Supporting industry to become more energy and resource efficient would be a better way of keeping British businesses productive.”

However the alliance, which is the umbrella body for a wide range of environmental bodies, called on ministers to back the review’s recommendation that the legacy costs of subsidising nuclear and renewable energy, such as feed in tariffs, should be separated from decisions on future bills.

Terry Scuoler, chief executive of EEF manufacturers’ organisation and a member of the the review panel, backed Helm’s findings that UK energy costs are too high.

Tom Greatrex, chief executive of the Nuclear Industry Association, welcomed the report’s recognition of what he described as ‘past failures to account for the cost of intermittent generation’.

“More intermittent power on the system will lead to higher additional costs, which isn’t reflected in the simplistic headline price comparisons we see. As the distinction between energy and electricity diminishes, we’ll need a mix of low carbon power to meet our decarbonisation and security of supply objectives.

“That is why policy should be informed by a whole system approach. Those who are serious about addressing these challenges should know better than pitting low carbon technologies against each other.”

On the review’s wider recommendations on tariffs and network regulation, Simon Virley partner and head of power and utilities at KPMG said they proposed a ‘a major overhaul’ of the power market.

“If his recommendations are adopted, they would have major consequences for generators, network companies and suppliers right across the energy market. The key question now is how much appetite and capacity there is in BEIS and Ofgem to undertake such a major programme of reform.”

Helm has proposed that standard variable tariffs should be replaced with a default tariffs that would be linked to the wholesale cost of energy.

On networks, he has recommended that Ofgem take action on what he called the overly-generous price caps currently in place.