Energy Bills 'Will Be Lower' Under New Policy

Energy Bills 'Will Be Lower' Under New Policy

Energy Secretary Ed Davey has said the Government's long-delayed Energy Bill would see consumers pay less for energy in the long-run.

As he introduced the legislation to Parliament, Mr Davey said: "The net effect of Government policy on energy bills is downwards not upwards."

His comments come despite admissions by the Department for Energy and Climate Charge (DECC) last week that the additional investment in green power would add £95 to energy bills by 2020. 

When considered alongside all other energy efficiency policies, however, the Government insists that bills will be £94 less in 2020 if the measures are introduced.

The cost to consumers is "the greatest concern", Mr Davey said, stressing that energy companies will come under pressure to help lower bills.

"We intend to underpin this with reforms to the retail market to simplify tariffs and make sure consumers are able to get the best deal for them," he said.

The Government estimates an extra £110bn is needed over the next ten years to restore the UK's ageing energy infrastructure, much of which is set to be allocated to low-carbon power sources.

By pumping more money into these renewable and "green" power generation, it also hopes to help bolster the country's ability to withstand energy shortfalls.

The Bill outlines a rise in the amount of investment in green power from £2.35bn a year in 2012 to £7.6bn in 2020.

"In an era of rising global energy prices, by shifting to more home grown sources of power and by becoming more energy efficient, we can cushion our economy and households from the fluctuations of world gas markets," Mr Davey said.

Measures detailed in the Bill included a requirement that any new coal plants built have carbon capture and storage, and plans for long-term contracts that see firms paid a guaranteed price for the electricity they generate from low-carbon sources.

A "capacity mechanism" scheme, which would see companies bid for support to provide power sources or reduce demand during peak demand, was also outlined.

In addition, the Government published proposals to cut demand for energy in the UK, as the DECC estimates a 10% reduction in electricity use could save £4bn by 2030 and reduce carbon emissions significantly.

But Mr Davey's lack of a target to decarbonise the power sector led to criticism from Labour's Caroline Flint said.

The shadow energy secretary demanded "a clear commitment" to decarbonise the energy sector by 2030.

She added: "Not just businesses in the renewables sector but elsewhere are really concerned about the lack of a vision of the Government on this issue.

"I make no bones about it: we support a clear decarbonisation target on the face of the Bill."