Utility Week

UTILITY WEEK | 28Th March - 3rd aprIL 2014 | 11 Policy & Regulation CCC @theCCCuk Extended compensation package 4 energy intensive industries. Mitigates competitiveness impacts of low-carbon policies to 2020 #Budget2014 uSwitch.com @uSwitchUK Carbon tax freeze could knock £20 off bills by 2020, but environment might pay the price – what are your thoughts? #Budget2014 Mat Hope @matjhope Treasury: "The main uncertainties in [CPF] costing relate to the future prices of oil, gas, coal and EU ETS permits." No sh*t. #Budget2014 energyhelpline @energyhelpline Budget offers little help for struggling domestic energy consumers #Budget2014 George Osborne @George_Osborne Have announced a £7billion package to cut the cost of manufacturing energy bills and benefit those of families too #Budget2014 The IMechE team @IMechE Support for energy-intensive cos & plans for new centre for #graphene positive news for UK manufacturing #Budget2014 Adam Scorer @adam_scorer #Budget2014 swings/roundabouts for energy consumers. RO/FiT costs passed from firms to households, offset by carbon tax freeze. Net result? EY UKI @EY_UKI #CPF freeze: Short term relief but long term consequences on #investment and #energy costs? #Budget2014 Friends of the Earth @wwwfoecouk #Budget2014 – It's dirty business as usual Which? Money @WhichMoney The carbon floor tax was reduced during #budget2014, saving families £15/yr. We want to see it scrapped altogether. Joss Garman @jossgarman Coal is dirtiest fuel in the energy system, but #budget2014 will make coal-burning even more profitable for big 6 than it is already. Tweets He is not reassured by the comment in the Budget that "the buying power of the Levy Control Framework will be unaffected by other Budget decisions". Warren adds that this is an "area of big concern" and more details are needed on how this will be achieved. A concern shared across large parts of the industry is that the cap to the carbon support price could potentially undermine the con- fidence of potential investors in low-carbon technologies. Tony Ward, head of power and utilities at EY, says Osborne faced a "difficult balancing act" in trying to ensure businesses and con- sumers do not struggle with rapidly increas- ing energy bills, while also trying to provide funds for low-carbon innovation. Ward adds that this appeared to be an "adjustment in mid-flight" and "investors who have committed to build assets or busi- nesses off the back of the original policy instrument will be increasingly suspicious of any new UK government policy". Paul Massara, chief executive at Npower, says the cap on the carbon tax will "ease the burden" on UK businesses and households, but he echoes Ward's words of caution. He believes the move will "impact on the ability to find investors for the billions of pounds' worth of energy infrastructure that Britain needs to build an energy future that is both secure and low carbon". The 2014 Budget is, as always, a com- promise. The UK needs to continue with its transition to a low-carbon future to ensure it meets its 2020 and 2050 carbon emission reduction targets, but at the same time, busi- nesses and households need relief from ever- increasing energy prices. A cap to the carbon support price does – temporarily, at least – offer something to both sides. However, the results of Osborne's "difficult balancing act" between low-carbon innovation and encouraging the economic recovery will only become apparent in the coming years. The carbon price (equivalenT £ per tco2) 2013/14 2014/15 2015/16 2016/17 2017/18 Pre-Budget 4.94 9.55 18.08 21.20* 24.62* Post-Budget 4.94 9.55 18.08 18.00 18.00 (max)* * indicative rates impacT of The budgeT cap on carbon tax will "ease the burden" on UK businesses and households, says Tony Ward, head of power and utilities at EY £800,000 average reduction in annual energy bill for a typical heavy industrial firm £290 million Cost to the government of the exemption of fuel for CHP from the carbon floor price between 2015 and 2019 £15 average reduction in annual domestic energy bill £340 million Lost tax revenue in 2016/17 as a result of cap to carbon price support £60 million Funding for carbon capture and storage technologies that show potential to reduce cost of low-carbon generation £6/mWh predicted drop in generation costs for coal plants The STorY bY numberS eSTimaTe planS 2013/14 2014/15 2015/16 Department of Energy and Climate Change £1.2bn £1.5bn £1.3bn Department for Environment, Food and Rural Affairs £1.8bn £1.8bn £1.6bn

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