Influencing the Government’s Electricity Market Reform


Tim Yeo MP:>>In 2008, Parliament passed a
new law, the Climate Change Act. This committed the UK to cutting greenhouse gas emissions
by at least 80% by 2050. A big cut in greenhouse gas emissions from the energy sector and from
electricity generation in particular is an essential first step towards meeting this
target. On top of this, no less than a quarter of our existing power stations must shut down
by the end of this decade. £100 billion of investment is needed to replace old polluting
power stations with cleaner low carbon energy sources.
The Energy and Climate Change Committee scrutinised the Government’s proposals right from the
start. The cheapest form of energy is the energy we don’t use in the first place.
Yet despite the fact that energy efficiency is one of the cheapest ways to cut greenhouse
gas emissions and to improve energy security and end fuel poverty, they were neglected
in the Government’s original proposals. So the Committee recommended that demand reduction
and energy efficiency be placed at the very heart of Electricity Market Reform.
Unfortunately today the Government is still putting too much emphasis on building new
electrical generating capacity, instead of promoting demand-side measures that would
improve security of supply and also reduce consumer bills. We recommended that reform
of the electricity market should be designed to include a target for cutting the carbon
intensity of our power system. This target would give investors greater certainty about
the direction of energy policy. As Chair of the Committee, I introduced an amendment in
the Energy Bill, which was based on the Committee’s recommendations. My amendment would have include
in the Bill an emissions target that would require power plants to cut their carbon emissions
substantially by 2030. Although this amendment was narrowly defeated by 23 votes, it was
one of the largest rebellions of this Parliament up to that point.
Our scrutiny showed that the Energy Bill as originally drafted actually threatened the
ability of small independent energy companies to compete with the Big Six. In the end the
Committee did secure important clauses in the Bill that allowed Government intervention
to ensure independent generators can have better access to the market.
The Committee’s scrutiny of the draft Energy Bill was widely recognised as leading to significant
improvements in the whole process of Electricity Market Reform. I’m sure that in the next
Parliament, the new Energy and Climate Change Committee will make sure that the Government
achieves this aim.

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