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New Energy Bill To Protect Consumers

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A new Energy Bill was introduced in Parliament last week. 

The Bill has been designed with two objectives in mind: (1) protect vulnerable households; (2) develop carbon capture and storage (CCS) technology.

(1) Protect vulnerable households

The Bill contains the following measures to protect vulnerable households:

(a) Mandatory social price support (including electricity bill rebates)

This provision builds on the success of the voluntary agreement with energy companies, which ends in 2011 and has helped reduce the fuel bills of more than one million vulnerable customer accounts. 

NB. The level of support to be provided through the new mandated scheme will be greater than the £150m committed by suppliers in the final year of the agreement.

(b) Additional powers & responsibilities for Ofgem

The Bill requires Ofgem, the energy market regulator, to:

(i) include the reduction of carbon emissions and the delivery of secure energy supplies in their assessment of the interests of consumers;

(ii) step in proactively to protect consumers as well as considering longer term actions to promote competition.

It also gives Ofgem additional powers to tackle market exploitation where companies might take advantage of constraints in the electricity transmission grid.

And it strengthens the deterrent nature of Ofgem's powers by extending the time limit from 12 months to 5 years within which Ofgem can impose financial penalties for breaches of licence conditions.

(2) Develop CCS technology

The Bill contains the following provisions to increase UK competitiveness in this emerging field:

(a) CCS Incentive

The new CCS Incentive will support the construction of up to four commercial-scale CCS demonstration projects in the UK.

The Incentive could also provide funding for the retrofit of demonstration projects to their full capacity, should it be required in the future.

(b) Clean coal

The Bill will also strengthen the UK's leadership position in the development of clean coal technologies, which could bring between £2-4 billion a year into the UK economy by 2030 and support between 30,000-60,000 jobs in fields such as engineering, manufacturing and procurement.

Energy and Climate Change Secretary Ed Miliband said:

"The new Energy Bill is an example of the Government taking direct action to ensure the markets work fairly and to help more of the most vulnerable with their fuel bills.  It will ensure that consumers can be confident that British energy is sustainable and secure.  Making the transition to a low carbon economy will be a challenge but this Bill will allow us to put in place key powers which will help us make the shift fairer for all."

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