Guarantees for gas and electricity supply

20th March, 2010

Guarantees for gas and electricity supply

The Conservatives say they will force electricity and gas suppliers to provide sufficient gas and electricity supplies as part of a plan to guarantee energy security.

The Tories plan to incentivise firms to build added capacity and intervene over supply contracts and storage facilities to protect gas supplies in the winter.

Tory leader David Cameron said energy policy was "out of date" and Labour had failed to modernise key infrastructure.

Labour said the policy approach was "simplistic and ill-thought through".

Publishing a consultation paper on energy security, the Tories said they supported government plans to build a new generation of nuclear power stations to replace the majority of existing plants which are due to cease operating by the middle of the next decade.

However, the Tories said Labour had "consistently ducked" the challenge of reforming power infrastructure and diversifying energy sources to offset the fall in North Sea oil and gas production.

'Lights off'

The party has warned that the "lights could go off" at some point over the next 15 years if existing capacity is not replaced and says its priority is to deliver secure, sustainable and affordable supplies of energy.

Under a new electricity capacity guarantee, regulators would be able to issue long-term supply contracts to generators to stimulate investment while gas suppliers could be required to build extra storage facilities to prevent strains on the network at times of peak consumption.

  We are setting out a Conservative programme for long-overdue reform of energy policy, together with the actions we will take to mobilise the investment required to enact those reforms

David Cameron
The Tories are also recommending a overhaul of the climate change levy, to charge firms on the basis of their emissions and to provide a "floor" price for carbon to encourage emissions trading.

Ministers will be required to deliver an annual energy policy statement to Parliament while energy regulator Ofgem will lose its competition and consumer protection powers - to be handed to the Office of Fair Trading - and focus solely on executing policy.

"British energy policy is out of date," Mr Cameron said.

"It was designed almost thirty years ago for a world in which Britain had an excess of generating capacity, in which we enjoyed the benefits of growing North Sea oil and gas production and in which neither local pollution nor climate change were the concern they are today.

"We are setting out a Conservative programme for long-overdue reform of energy policy, together with the actions we will take to mobilise the investment required to enact those reforms and our strategy for minimising the cost to consumers."

'Staggering'

Labour have accused the Tories of dithering over energy policy and offering lukewarm practical support for both nuclear and renewable.

"Today's paper bears all the hallmarks of Tory policy in the past few months: it is simplistic and not thought through," said Energy and Climate Change Secretary Ed Miliband.

"It is staggering that in a paper on energy markets the Tories have nothing to say about consumer fairness or fuel poverty," he added.

The Lib Dems said the Tories had performed a "massive U-turn" on nuclear development and it was now the only one of the three largest parties to oppose what it said was a wasteful and environmentally hazardous plan to replace the UK's ageing nuclear infrastructure.