- 36 updates
Energy Secretary Ed Davey told ITV Business Editor Laura Kuenssberg that consumers will be paying more for energy in eight years time, but said that those increases will eventually lead to bill reductions.
The CBI welcomed the Government's energy plans, but warned that vulnerable consumers should be protected from price hikes.
Its Director-General, John Cridland, said: “This package will send a strong signal to investors that the Government is serious about providing firms with the certainty they need to invest in affordable secure low-carbon energy.
“We now have political agreement on this critical issue and the Government should get the bill on the statute books as quickly as possible.
“As more details emerge, the Government should ensure that those households and businesses most vulnerable to increased energy prices are protected.”
A new energy-efficient electricity infrastructure will create "a massive increase in jobs" now, while the impact on household bills will rise gradually, Energy Secretary Ed Davey told ITV Business Editor Laura Kuenssberg.
The Liberal Democrat MP said that the average consumer is currently paying 2% of their energy bill to supporting clean energy and this will rise to 7% by the end of this decade, but this increase will pay for a system that will actually reduce energy bills in the long term.
"We think [the rise will be] slightly under a £100 in eight years time, but the offsetting measures of things that will go the other way, and all our policies together, will mean that we think the average household will see a bill that's reduced by 7% than it otherwise would have been."
The Federation of Small Businesses has called on energy reform "to go hand in hand with radical changes in the retail energy markets" to deliver tighter regulation of the "big six" energy companies.
Liberal Democrat Energy Secretary Ed Davey told ITV Business Editor Laura Kuenssberg that after an initial spike in household energy bills, costs will ultimately come down, because of investment in energy and moves towards energy efficiency.
- The creation of a Government-owned company to act as a single counterparty - said to give investors confidence to enter into new long term Contracts for Difference for low carbon electricity projects.
- Powers to introduce a capacity market, allowing for capacity auctions from 2014 for delivery of capacity in the winter of 2018/19, if needed, to help ensure the lights stay on even at times of peak demand.
- Amendment during passage of the Bill to take powers to set a decarbonisation target range for 2030 in secondary legislation. A decision to exercise this power will be taken once the Climate Change Committee has provided advice in 2016 on the 5th Carbon Budget which covers the corresponding period.
In the meantime, the Government said it will issue guidance to National Grid setting out an indicative range of decarbonisation scenarios for the power sector in 2030 consistent with the least cost approach to the UK’s 2050 carbon target.
The guidance, it said, will reflect both the existing fourth carbon budget and a scenario in which it is reviewed up, as outlined when the budget was set.
The Department of Energy and Climate Change estimates that homes will have to pay an extra £95 a year for cleaner energy, while the Climate Change Committee estimates the cost will be an extra £110, ITV Business Editor Laura Kuenssberg said.
Tim Yeo, Chairman of the House of Commons Energy and Climate Change Committee, said Liberal Democrat Ed Davey's Energy Department had "come out ahead on points" in negotiations, and he described the Treasury's package of support for green power as "realistic".
He told BBC Radio 4's Today: "I personally think that a couple of pounds a week - maybe rising to almost £3 a week - is a reasonable price for Britain to achieve a degree of energy security to reduce its total dependence on fossil fuels and to honour its commitments to cut green house gases."
Latest ITV News reports
It is the Government's long awaited light bulb moment. The Energy Bill published today envisages changes that would reach into our lives.
By 2020 we will be paying nearly £100 a year more for energy. But whether bills will come down again afterwards is still in dispute.