Revenue cap won’t stymie investment, minister insists

Government plans to cap the revenues of low-carbon generators will not “disincentivise or undermine” existing business plans for renewable power schemes, the energy minister has insisted.

Winding up the debate on the government’s emergency Energy Prices Bill on Monday evening (17 October), Graham Stuart was challenged by backbench MP Peter Aldous on moves in the legislation to introduce a ‘cost-plus revenue limit’ on nuclear and renewables.

Warning that investment could be “imperilled”, the Suffolk MP said: “This mechanism could penalise investment in clean, cheap and low-carbon generation.”

Aldous, who is a former chair of the PRASEG renewable energy all-party parliamentary group, said the proposed cap could have a “similar negative impact” in terms of deterring investment to the extension the oil and gas windfall levy, which the government has resisted.

Responding to Aldous’ concerns, which are widely held across the energy industry, Stuart said: “One of my biggest concerns when we were looking at the package was to ensure that there are no disincentives to investment in renewables.

“We are talking about prices linked to gas that are completely outwith any of the expectations of those who run long-standing nuclear and other low-carbon production. This is an intervention that deals with prices well beyond any prior expectation. It will therefore not disincentivise or undermine any existing business plans.”

He added that the government will bring forward further proposals in due course and will consult with the industry to ensure that its measures do not disincentivise investment.

Ex-pensions minister Guy Opperman urged the UK to follow the lead of other European countries like France and Germany on launching energy saving campaigns, adding that it is “utterly ridiculous” that some rooms in the House of Commons are heated to 30 degrees Celsius.

Urging the government to introduce a public campaign, the Hexham Tory MP said: “That is not the nanny state; it is outlining the support that people can take advantage of.

“The state is subsidising the energy consumption of people up and down this country If there is less usage, the state needs to provide less subsidy, providing savings to the Chancellor. Surely that is both self-evident and a self-fulfilling prophecy of reduction in expenditure.”

Former shadow energy secretary of state Barry Gardiner claimed that increasing taxes on oil and gas profits would net the Treasury an additional £15 billion, which would pay for the £7.5 billion estimated cost of supporting energy customers’ bills until April when new chancellor of the exchequer Jeremy Hunt has said payments will be more targeted.