LONDON Feb 24 Constant government intervention
in Britain's energy sector has led to a complex system of
subsidies and an uncompetitive market that fails to deliver
low-cost and secure electricity, a report by an upper-house
parliamentary committee said on Friday.
Successive governments have taken measures since the early
2000s to encourage lower-carbon electricity generation, such as
the closure of coal plants and subsidies for renewables and new
nuclear plants, the Economic Affairs Committee report said.
Power generated from fossil fuels is still cheaper than from
renewables, the report said, and the average domestic
electricity bill has risen 58 percent since 2003.
The government is under pressure to act on rising energy
costs after three of Britain's biggest energy suppliers
announced price rises over the last few months.
"Poorly designed government interventions, in pursuit of
decarbonisation, have put unnecessary pressure on the
electricity supply and left consumers and industry paying too
high a price," Clive Hollick, chairman of the committee at the
House of Lords, said in a statement.
The report said numerous schemes and subsidies designed to
encourage renewable generation and investment in new power
plants were not ensuring security of supply.
There are also concerns about the reactor technology and
finance for EDF's planned Hinkley Point C nuclear plant
in southwest England and other nuclear projects.
"It is imperative that the government publishes contingency
plans for how it will make up the capacity due to be provided by
these plants in the event one or more does not succeed or is
delayed," the report said.
The committee advised the government to reduce and remove
interventions in the market by securing generation capacity
through a single competitive auction for supply.
It should also establish an independent advisory body to
scrutinise energy policy decisions and recommend how best to
The committee's report was criticised by some renewables
investors who point to a rapid decline in wind and solar costs
over the past few years, with offshore wind dropping below 100
pounds ($125) per megawatt-hour and expected to decline further.
Energy market regulator Ofgem said this week that only a
small part of a rise in wholesale energy costs, which are
ultimately passed onto consumers, was down to government
($1 = 0.7995 pounds)
(Editing by Dale Hudson)