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Should Energy Prices Rise?

Energy prices in Britain are likely to rise dramatically in the next few years, says Alistair Buchanan, the energy regulator, as energy supplies look likely to contract. In fact, up to one fifth of Britain’s current power stations (mainly coal and nuclear) are to be decommissioned over the next ten years due to age, or because they do not meet EU emissions rules. New stations will not be built to keep pace with closures. Britain’s capacity to generate electricity will therefore fall and more energy, particularly gas, will need to be imported. That brings costs, both in terms of rising prices and energy security.

The problems for securing the UK’s energy supply over the long term are therefore urgent. They have been exacerbated by the uncertainty which has characterised HMG’s policy in recent decades. This has led to a shortage of the long term investment needed to build the necessary infrastructure. So one notable casualty has been Britain’s ageing nuclear power stations; another, the investment needed for developing expensive technologies such as Carbon Capture and Storage.

Other problems have also come into play – the regulations coming from the Department for Energy and Climate Change and the EU for lower carbon emissions (e.g. Renewable Obligation and the Carbon Reduction Commitment), which lead to higher energy bills for homes and businesses. So rising energy prices are the penalty for failed or absent policies. Politeia’s authors and contributors will be addressing the problems in the coming year.

 

Neil O'Sullivan

Neil O'Sullivan is an Associate in Commercial Litigation at Addleshaw Goddard. He was Assistant Director at Politeia between 2012 and 2015, having studied History at Cambridge University.

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