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'Reform of the electricity market'

Her Majesty The Queen has today delivered her annual speech at the state opening of Parliament. As part of her speech, the Queen announced that the Government will propose reforms to the electricity market. “My Government will propose reform of the electricity market to deliver secure, clean and affordable electricity and ensure prices are fair,” stated the Queen.

The Energy Bill aims to reform the electricity market to enable large-scale investment in low-carbon generation capacity in the UK and deliver security of supply in a cost-effective way.

Commentating on the forthcoming Energy Bill, a DECC spokeswoman said: “This is crucial legislation. The Energy Bill would reform the electricity market to keep the lights on and emissions down in a more cost-effective way, while reaping the economic benefits. It is designed to provide investors with long-term certainty and incentives to invest in low-carbon. We will shortly publish a draft Bill for pre-legislative scrutiny, to enable swift passage of well considered legislation this session.

“This legislation would reach the statute book by 2013 so that the first low-carbon projects can be supported under its provisions in 2014.”

In response to this, the ECA states that it welcomes the Energy Bill, but calls for energy efficiency to reduce the UK’s demand for electricity. It claims that whilst the Department of Energy and Climate Change (DECC) is yet to finalise the details of the Bill, its overriding aim was clearly outlined by the Queen; to incentivise electricity producers to increase low-carbon electricity generation.

As part of the Bill, it is expected that Government will agree frameworks for contracts with electricity generators to promote low-carbon electricity. These contracts will state that, where the production of low-carbon electricity is uneconomic compared to traditional fossil fuel generated electricity, the contracts will be subsidised by Government.

Paul Reeve, Head of Environment at the Electrical Contractors’ Association (ECA), comments: “There are six options for generating more electricity in the UK; oil, gas, coal, nuclear, renewable, and energy efficiency. While we welcome initiatives that encourage low-carbon energy production, the most sustainable and cost-effective way to meet demand for electricity is to actively pursue energy efficiency. The ECA supports policies which encourage the reduction of the UK’s carbon demand through increased energy efficiency, over measures which subsidise carbon or nuclear based energy production.”

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