* Bills to rise 5-9 pct less with reforms until 2030
* Wind farms to get most from low-carbon budget
* Utilities welcome bill, urge speedy legislation
By Karolin Schaps and John McGarrity
LONDON, Nov 29 Britain is considering exempting
industrial users from extra costs arising from landmark energy
reforms announced on Thursday while consumers face higher bills
as the country replaces ageing capacity with low-carbon power.
Britain's Energy Bill, introduced to parliament on Thursday,
aims to ensure the EU's second-largest economy can keep the
lights on and diversify its energy mix in view of legally
binding carbon targets.
"We propose nothing less than the biggest transformation of
Britain's electricity market since privatisation (in the
1990s)," Edward Davey, Secretary of State for Energy and Climate
Change, told parliament.
While energy-intensive industries could be spared much of
the extra costs arising from reforms to reduce carbon emissions
in Britain's energy industry, consumers will have to pay around
75 pounds more a year by 2020 to fund technologies such as wind
farms, nuclear power stations and carbon capture, the energy
"With or without reform, household electricity prices are
likely to increase over time. However, Electricity Market Reform
will help to reduce the amount that prices and therefore bills
will increase," the energy ministry said in its policy outline.
Household energy bills are estimated to rise 5-9 percent
less between 2016-30 than if no changes were made, delivering a
net benefit of 1.3-7.4 billion pounds up to 2030, it added.
Demand for power is expected to rise by 30 to 100 percent by
2050, the government said, by which time Britain has undertaken
to slash it greenhouse gas emissions by 80 percent.
Details on how heavy industry will be cushioned from the
reform costs have yet to be agreed, a spokesman for the energy
The government will launch a consultation next year, but
exemptions for industrial users will be subject to European
Union state aid approval.
"Energy-intensive manufacturing is finally getting its place
in the sun today, by the exemption from necessary new energy
costs," said John Cridland, director general of UK business
The government's Energy Bill will intervene in the energy
market in four crucial aspects: setting up contracts to
guarantee a minimum power price for low-carbon generators, such
as wind farms and nuclear plants; a mechanism to encourage
back-up capacity; a minimum price for carbon; and a maximum
allowance for carbon emissions from power plants.
Around 20 percent of Britain's generating capacity is
scheduled to be taken off line over the next decade, and the
cost of meeting future demand with low carbon generation could
swell to 330 billion pounds by 2030, according to the London
School of Economics.
Last week, the government spelled out that the amount of
taxpayers' money spent on low-carbon power generation would be
capped at 7.6 billion pounds in real terms by 2020, an increase
from 2.35 billion pounds currently allowed.
Wind power projects, especially those built offshore, will
receive the "quite a lot" of the levy money, Secretary of State
Davey told journalists on Thursday, adding that an exact
division of the funds among technologies was not set.
The bill is expected to receive royal assent next year and
come into force in 2014.
Britain's utilities, which are expected to front a
substantial amount of investment needed to modernise the
country's energy market, largely welcomed the proposals.
Scottish Power said it had committed to spending
3.5 billion pounds in Britain by 2014 and called for legislation
to be passed quickly.
"Where there is a clear, long-term commercial and regulatory
framework, Iberdrola and Scottish Power will invest," Keith
Anderson, Scottish Power's chief corporate officer, said.
Three of Britain's largest low-carbon energy associations
said the bill could help create around 95,000 jobs in the energy
"This bill is crucial in setting the investment framework
for the next 20 years and ensuring that we can build on our
current world lead in offshore wind and marine technologies, and
guarantee clean domestic power and tens of thousands of green
jobs," said Maf Smith, deputy chief executive of RenewableUK.