- Energy Prices Bill gives government expansive new powers
- Industry warns measures could threaten green energy investment
According to Bloomberg’s article published on October 26, 2022, the UK’s Energy Prices Bill has become law, giving new Business Secretary Grant Shapps fresh powers to limit the revenues of renewable electricity generators.
The government is looking for a way to address what it has called “extraordinary profits” that some renewable producers are making from high power prices. Britain’s energy sector derided the measure as harmful to investment and is now waiting to see if the new Conservative leadership will provide any relief from the policy.
As the government focused on a change in leadership, the bill was making its way through the parliamentary procedure and completed the final stage to becoming law. While providing vital support to households struggling with energy costs, it will also allow the state -- if it chooses to -- to override the country’s energy regulator, by capping revenues of electricity generators and regulating suppliers.
The energy industry has warned that the measures could upend the stable regulatory environment that’s been key to driving investment in UK wind power. Britain’s wind-power industry is one of the largest in Europe, and crucial to the country’s climate goals and ambitions to be independent of volatile fossil fuel markets.
One aspect of the bill is a cap on revenues from low-carbon power generation like wind farms, solar parks and nuclear plants. The legislation gives the government the power to enact the measure, but leaves the details about the level of the cap to be decided later.
Still, the government may not decide to use its new powers -- and that’s what the industry is hoping for.
“If we now have this license for the secretary of state to intervene in markets under conditions that aren’t fleshed out, that might have a cooling effect on attracting new investment,” said Ana Musat, executive director of policy and engagement at industry group RenewableUK. “There needs to be stability because that’s what drives investors.”
Some members of the House of Lords proposed amendments to the bill that would have limited its scope, including requiring further parliamentary approval, regardless of the levels. But no amendments were approved, leaving the bill mostly unchanged.
During debate of the bill on Monday, Jeffrey William Rooker -- a current member of the House of Lords and former Labour Party member of Parliament -- cautioned that the broad powers contained in the bill gave too much power away from Parliament.
“The House of Commons in particular needs to wake up, and fast, to what has been happening, for the sake of our democracy,” Rooker said.
Shapps replaced Jacob Rees-Mogg as business secretary on Tuesday as new Prime Minister Rishi Sunak set out his top ministerial team.
A top UK official warned in a letter to Rees-Mogg dated dated Sept. 29 that the price cap on household energy bills “poses risks,” including potential fraud. Sarah Munby, permanent secretary at the Department for Business, Energy and Industrial Strategy, said in the letter that the government has a robust approach to managing fraud risks, but the scale of expenditure means that even small rates of fraud would have “significant impacts to the public purse.”
