MPs told the UK is in good shape and EMR will work

by Janet Wood

The UK energy industry is in good competitive shape, it has a leading position on decarbonisation and Electricity Market Reform is complex but probably workable.

That was the view from outside the UK given to cross-party MPs on the Public Accounts Committee taking evidence this week for an energy policy “landscape review”. It came from Laszlo Varro, head of the International Energy Agency’s gas, coal and electricity division.

Asked about the big six supplier “cartel”, he said there was only one major supplier each in France and Italy, three or four in Spain and four in Germany. On the low-­carbon agenda, he said that “in most countries the prime minister makes a speech, while the UK has legislation in place”. He added that he thought the UK could not meet low-carbon targets without nuclear.

Were he heading the Department of Energy and Climate Change (Decc), Varro said his first act would be to “finalise the policy”.

Over the following two-hour session taking evidence from Decc officials, MPs accepted that £75 billion was needed to build new power plants between now and 2020 (alongside £35 billion investment in networks, funded separately).

However, they wanted to know how much customers would be asked to pay to support renewables and nuclear via contracts for difference, and to fund programmes such as Warm Homes and feed-in tariffs. Decc estimated annual totals at £2.5 billion for 2013, rising to £4.2 billion in 2014 and £8 billion from 2017. It said the total cap would be negotiated with the Treasury during spending reviews.

This article first appeared in Utility Week’s print edition of 6 July 2012.

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