Electricity Market Reform White Paper

 

The Government has published the electricity market reform White Paper, titled ‘Planning our electric future: A White Paper for secure, affordable and low-carbon electricity’. The paper sets out the series of reforms to the electricity market which are intended to attract investment, reduce impacts on consumer bills and create a secure source of electricity from mixed sources. Speaking about the White Paper, Secretary of State for Energy and Climate Change, Rt. Hon Chris Huhne MP said the purpose of the paper was to introduce “a series of measures to reform the electricity market. Diversifying our generation mix, and boosting investment in secure, sustainable and home-grown low-carbon technologies.” Announcing the publication of the White Paper, Chris Huhne MP highlighted five key elements to the reform. Firstly, the introduction of a carbon floor price, as set out in the Budget 2011, to introduce greater price certainty into the market for carbon. Secondly, the introduction of Contracts for Difference, intended to provide the financial incentive for investment in all types of low-carbon generation. Thirdly, emissions performance standards will also be introduced to regulate the amount of emissions new fossil-fueled power stations can emit. Fourthly, a new contracting mechanism will be introduced to change the way back-up electricity is secured and finally the paper sets out plans for transitional arrangements whilst the new institutions are set up. As well as ensuring security of supply the reforms are intended to introduce greater competition into the market, with Chris Huhne MP stating that, “Six energy companies supply around 99% of customers in the UK. Alongside action by Ofgem to improve liquidity, these reforms will boost competition within the market, the reforms I have set out today will achieve our aims at least cost to the consumer, with bills for households and businesses likely to be lower and less volatile over the period to 2030 than if we had left the market as it is.”

Read the press release
Read Chris Huhne MP's statement