Weekly News Review - 14th October 2022
Ofgem to call on consumers to cut gas and electricity use
The UK’s energy regulator will advise households to reduce their gas and electricity use “where possible” after the government blocked a state-led information campaign amid fears over potential blackouts this winter. Ofgem’s chief executive, Jonathan Brearley, is expected to announce the regulator’s public information campaign on Thursday, when he will tell the Energy UK conference “this isn’t the time for complacency” as energy costs continue to rise.
He is expected to say that reducing energy consumption is “not only the most direct way of reducing our bills [but] it directly helps with security of supply, contributes to decarbonisation, and saves money for the public finances,” according to the Financial Times.
As part of the campaign, Ofgem will reportedly collaborate with groups including Citizens Advice to ensure information reaches as many households as possible. “We are one player among many that are trying to make this happen and I think the details of how we do it are still to be worked through,” Brearley told the FT.
It comes after Liz Truss’s government blocked plans for a public information campaign to encourage people to reduce their energy use, claiming it would seem like the actions of a “nanny state”. Jacob Rees-Mogg, the business secretary, had reportedly signed off on a £15m campaign before it was scrapped by Downing Street.
The decision was made despite fears that households could experience a series of three-hour power cuts this winter if Vladimir Putin shuts off gas supplies from Russia or Britain experiences a cold snap, according to the National Grid.
The Ofgem boss’s speech will be the first made by the regulator’s chief executive since Truss’s government announced it would spend up to £150bn to slash surging energy bills for households and businesses.
Power giants to face ‘windfall tax’ after all as Liz Truss delivers U-turn
Renewable power companies will have their revenues capped in England and Wales, after the government bowed to pressure to clamp down on runaway profits. The announcement late on Tuesday night provoked immediate accusations that Downing Street had performed “another screeching U-turn” – having previously rejected calls to impose a windfall tax on power giants.
On the leadership trail, Liz Truss repeatedly resisted calls to cap huge profits being generated by power companies, after Boris Johnson’s government imposed a £5bn windfall tax on oil and gas companies in May, taking a slice of their profits.
Truss ruled out a windfall tax on power generators when vying with Rishi Sunak to become prime minister, calling it “a Labour idea and all about bashing business and it sends the wrong message to international investors and to the public”.
The business department said it was stepping in with a temporary “cost-plus revenue limit” for renewable and nuclear electricity generators in England and Wales. This will curb the amount generators can make, “allowing generators to cover their costs, plus receive an appropriate revenue”, and will come into force at the start of next year.
“The government has finally accepted the principle of Labour’s call for a windfall tax on excess profits of electricity generators. After months of telling the country they were utterly opposed to the principle of a windfall tax, they have been dragged kicking and screaming to implement it.”
Ed Miliband, the shadow climate and net zero secretary
The detail was contained in the government’s new energy prices bill, which limits power prices for households at an average of £2,500 a year and is estimated will cost taxpayers about £89bn. It has been estimated that taxing generators such as wind and solar farms could raise between £3bn and £4bn to help offset some of this cost.
The announcement was light on details, but the government said it had been working closely with industry on the proposal, and would launch a consultation shortly. BEIS is liaising with the Scottish government to confirm whether the measure will extend to Scotland. The legislation also allows for a temporary revenue limit to apply in Northern Ireland.
Liz Truss on collision course with Jacob Rees-Mogg over solar power ban
Liz Truss is facing a rebellion from Jacob Rees-Mogg’s business department over plans to ban solar power from most of England’s farmland. The prime minister and her environment secretary, Ranil Jayawardena, want to ban solar from about 41% of the land area of England, or about 58% of agricultural land, the Guardian revealed earlier this week.
But her business secretary, Rees-Mogg, is understood to believe it is “unconservative” to tell farmers what they can and cannot do with their land. Her climate minister, Graham Stuart, said on Wednesday he would be speaking to Defra about the plans as more ground-mount solar is needed to meet renewable energy targets.
In a piece for the Guardian, Rees-Mogg, who has previously decried “climate alarmism”, insists he is convinced by the need to boost renewable energy. He also reveals new policies including loosening regulations for businesses to put solar power in place and giving homeowners grants to install panels on their houses.
In the piece, he says he is “not a green energy sceptic”, adding that his department would give “unprecedented support” to renewable energy sources. Rees-Mogg also brands coalmines and oil rigs as “dark satanic mills”, vowing to replace them with windfarms.
On solar, he adds: “We are exploring options to support low-cost finance to help householders with the upfront costs of solar installation, permitted development rights to support deployment of more small-scale solar in commercial settings and designing performance standards to further encourage renewables, including solar PV, in new homes and buildings.”
Stuart told the environmental audit committee in parliament on Wednesday that his and Rees-Mogg’s Department for Business, Energy and Industrial Strategy opposed the ban. He said his department would be speaking to Defra about its plans.
“We’re going to work closely with Defra, and the British energy security strategy set out an expectation for a fivefold increase in solar,” he said. “It’s clear that we need significant growth in both ground-mount and rooftop solar to meet this ambition.”
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