Carola Hoyos Update 9: Reactions to Ofgem’s energy report

Ofgem, the UK energy regulator, has calculated that £200bn will be needed to keep the country’s lights and heat on.

The following is a list of reactions to Ofgem’s report. Energy Source will update the list as reactions come in. Add your own via the comment box.

Robin Oakley, the head of the Greenpeace climate and energy team:

The Ofgem analysis should act as a wake-up call to all politicians. It clearly states that as the economy recovers, the best way to secure Britain’s energy future while minimising price rises for consumers is to invest in renewables and energy efficiency. The threat of 60% price rises only materialises if the Government’s own renewables and carbon targets are missed, while the least cost option for the consumer is to go green. This new report should be required reading for Chancellor Alastair Darling and Shadow Chancellor George Osbourne, who should now commit to investing in a clean energy revolution that will be good for the climate, good for British industry and good for energy consumers.

Ann Robinson, director of policy at uSwitch, warned consumers were only getting half the picture:

If bills rise by the amount that Ofgem suggests, we will all have got off lightly. If Ofgem continues to ignore the impact of wholesale and pricing trends in these scenarios then it will be doing consumers a disservice.

David Hunter, analyst at McKinnon & Clarke, the industry consultant:

This has lead to ageing power stations not being replaced, a lacklustre approach to developing new technologies such as carbon capture and clean coal, and poor gas storage facilities.

Roger Salomone of EEF, he manufacturers organisation:

The real the elephant in the room is the 2020 renewable energy targets and the dogmatic approach of specifying exactly how much renewable energy must be generated and by when. Our response to climate change must be robust but flexible, otherwise we risk exposing consumers and businesses to higher costs during what will be very challenging times.

Garry Felgate, chief executive of the Energy Retail Association, the energy suppliers association:

Energy suppliers face the challenge of meeting our future energy needs and reducing carbon emissions, all at an affordable cost to customers. Once again Ofgem’s report highlights how difficult these needs are to balance, at a time when bills already include the costs of energy efficiency schemes, renewable energy obligations and transmission and distribution charges.

John Cridland, deputy-director general of the CBI, the business lobbyist:

Firms need to be able to invest in new energy infrastructure with confidence. That’s why we need to see the National Planning Statements published as soon as possible, as well as regulatory frameworks and funding arrangements for Carbon Capture and Storage demonstration plants.

Greg Clark, shadow energy and climate change secretary, said:

Britain’s energy policy is as much a horror show as the public finances. As we have repeatedly warned, after 12 years of the Government having its head in the sand, consumers face a combination of power cuts and high bills. Because the Government failed to prepare for the shortfalls that are now predicted, consumers will face higher bills to pay for emergency capacity.

Michael Hurley, Global leader Energy and Utilities at PricewaterhouseCoopers, the consultants:

“On prices there is a tripple whammy: energy prices will rise as energy companies seek to recover the enormous investment in new generation capacity and infrastructure which is required. Secondly the UK is no longer an island and will need to compete globally for gas security, which will put upward pressure on costs. Lastly, the UK will need to fund directly or indirectly its carbon and renewable obligations. The big unanswered questions are how all will this be financed without more policy certainty to underpin the investments and also how quickly new investment will flow given the considerable cost uncertainty surrounding the large scale introduction of new renewables technology.

Richard Gledhill, global leader of climate change and carbon markets at PricewaterhouseCoopers:

Keeping down the price of energy for all, removes the vital financial incentive for efficiency. We need to work much harder at energy efficiency in our homes and offices to reduce consumption and this will help to contain the cost concerns. The Government is obviously concerned about fuel poverty, but in a low carbon economy, this probably needs to be addressed in new ways, not be keeping fuel prices low for all.

Robin Webster, campaigner at Friends of the Earth, the environmental activist:

The best way to minimise costs for consumers is through a massive programme to
cut energy waste across the country. Insulating our homes will slash energy
bills and help eradicate fuel poverty and, coupled with investment in green
energy, will cut carbon emissions and create hundreds of thousands of new UK

John Constable, director of policy and research for the Renewable Energy Foundation, the research and advocacy charity:

Ofgem’s important study vindicates the view that government optimism and a market distorting renewables policy is resulting in an economically and geopolitically imprudent overcommitment to gas. Corrective action is required urgently for the good of all, including the renewables sector.

Vincent de Rivaz, chief executive of EDF Energy, the utility:

The scale of the investment required makes it all the more vital that the right decisions are made now to ensure prices are kept as stable and affordable as possible. Most urgently, this includes the publication of a Nuclear National Policy Statement in the coming weeks which should provide a clear statement of need and is explicit about the scale of contribution from nuclear. In addition, the carbon market needs to be further developed to provide sufficient clarity to assess large long- term capital investments. On this, UK-specific action is needed to reinforce the operation of the EU ETS in the UK, which could be through a UK carbon price floor, which is not a subsidy but a cost payable by carbon emitters.

Tony Ward, partner in Ernst & Young‘s power and utilities team:

Lower levels of demand now offer an opportunity to embed change that could not have been anticipated 12 months ago. But we need to seize this opportunity and act now. Crucial decisions that will set the investment framework for projects that will ultimately deliver the UK’s energy objectives have to be made well before 2015.

Andrew Harrop, Head of Policy for Age Concern and Help the Aged, the charities:

Energy prices have gone up by more than 100 per cent since 2003 and energy companies have failed to pass the recent drop in wholesale prices on to customers. Now over two million pensioner households are bracing themselves for a winter in fuel poverty.

Ian Parrett, analyst at Inenco:

Last year we saw short term prices almost triple when supply was tight. By the time we get to 2016 even the 60% figure may prove to be conservative.

Mr Weir, MP of the Scottish National Party and spokesman for Westminister Energy:

This report totally vindicates the Scottish Government in driving forward investment in renewables – making more determinations on energy applications over the last two years than the previous executive in its last four years of office. The difference between the UK Government, which has missed opportunities on Carbon Capture and been pre-occupied with new nuclear developments, contrast with the Scottish Government which has put renewables at the heart of Scotland’s new economy and society, alongside carbon capture and greater energy efficiency, could not be more stark.

Andrew Horstead, analyst at Utilyx, energy and climate change consultant:

Inevitably the burden of the £200 billion investment required will fall on the private sector, whether that be in upfront investment from the suppliers, or via increasing bills to the business community. With energy bills already including 40% of ‘green’ taxes, this announcement is going to make it even tougher for commercial energy users to keep their operating expenses under control and poses a greater threat to businesses trying to plan their longer term risk management strategies.