This morning’s clampdown by the UK regulator on the country’s big six utilities was unexpectedly hard-hitting.
Apart from the news that the companies may be forced to auction up to 20 per cent of their electricity generation output, there was the harsh tone struck by the regulator’s chief executive, Alistair Buchanan. He said:
Energy companies have failed to play it straight with consumers and so Ofgem is proposing to break the stranglehold the Big Six have over the electricity market.
Last week I wrote that one of the areas of complete agreement at a debate during the European Future Energy Forum had been the need for a high and stable carbon price to incentivise low carbon energy production. But I added that nobody knew how to bring it about.
During that debate, the foreign office minister Lord Howell said:
The government has got to keep its nerve and do some brave things which are highly unpopular and likely to lose nice votes. This is getting if anything more difficult, as gas gets very cheap, and the gap with renewables widens. We need to get costs down and carbon price up.
This resolution to make a potentially unpopular move will be tested on Wednesday evening. That is when the big six British energy companies, including Centrica, EDF and Scottish Power, will warn Chris Huhne over dinner that the government’s proposed carbon floor price is not going to achieve much.