Miliband calls for timetable to decouple electricity and gas prices

Ed Miliband has urged the government to set out a clear timetable for decoupling the price of electricity from that of gas and has opposed provisions which would allow a hydrogen levy to be introduced on domestic customers bills.

In a Parliamentary debate on the Energy Bill, which re-entered the House of Commons yesterday (9 May) following a bruising passage through the Lords, the shadow secretary of state for energy security and net zero said the opposition supported the broad thrust of the legislation.

But he said Labour wanted to go further on many of the reforms which are being proposed in the bill, describing it as a “route map to basecamp” that “will not take us to the summit.”

This include setting out a timetable for decoupling electricity prices from those of gas, which the government is considering as part of the REMA (review of electricity market arrangements) consulted on last year.

Miliband said: “Even if we get all of those renewables and indeed nuclear, the price of electricity is currently tied to the prevailing price of gas.

“There should be a commitment in the Bill to a timetable for that delinking; otherwise, we will get more drift and delay and we will not reap the benefits of the move to zero-carbon power.”

Miliband also urged ministers not to reverse a House of Lords amendment to the bill, which blocks a government provision for a levy on customer bills to help support the development of the fledgling hydrogen industry.

The proposed levy is designed to provide an option for subsidising the facilities that will be required to store and transport hydrogen.

But it would be unfair to ask ordinary customers to support this kind of infrastructure given that hydrogen will primarily benefit heavy industries that will rely on the gas to decarbonise, Miliband said: “There is a strong economic case for investing in hydrogen through public investment. That is what the US is doing. Much of the benefit of new investment in hydrogen will go to industry—not consumers directly—which will be at the front of the queue for its use. Putting the cost of hydrogen on consumer bills, as the legislation originally proposed, is not the right way forward.

“The right thing to do is surely to make public investment, through public expenditure, in hydrogen, not just bung the money on to bill payers. In the course of discussing the bill, I hope we know how much will be put on to bill payers. We cannot just add levy after levy because the Treasury says, ‘we don’t want to invest’.”

Miliband was backed up by former Conservative minister Alec Shelbrooke, who said the proposed levy is “misguided” and “in the wrong place”.

Chris Skidmore, former Tory energy minister and author of the government-commissioned net zero review that was published earlier this year, expressed support for the “continued inclusion” of the block on the hydrogen levy and other amendments to the bill that were voted for by the House of Lords.

And he pledged to retable many of the amendments, which also include equipping Ofgem with a net zero duty and provisions to make all homes meet the EPC (energy performance certificate) band C by 2035, if required.

Responding for the government, junior energy minister Andrew Bowie said the government provisions in the bill are not designed to “immediately introduce a levy”, the detailed design of which will be consulted on.

Any decision to introduce a levy will take into account the affordability of energy bills, he added.