Hit To Community Renewables By UK Energy Prices Bill

As people across the UK, including in those areas producing excess renewable power, face blackouts this winter and extortionate fuel bills, legislation has been fast tracking its way through the UK Parliament. We might have seen the removal of one Prime Minister and the selection of yet another, but whilst this battle within the Tory party went on, the work of the UK Parliament and indeed all of our parliaments continued.

The Energy Prices Bill, was introduced in the UK Parliament on 12 October, it:

“provides the legislative footing needed to ensure that people and businesses across the UK receive support with their energy bills this winter through the Energy Price Guarantee for domestic consumers and Energy Bill Relief Scheme for businesses and non-domestic properties. This includes essential measures that enable the UK government to deliver comparable schemes in Northern Ireland and legislation that will require landlords and heat network operators to pass benefits through to tenants.”

The devolved parliaments have limited powers when it comes to Energy, but the Scottish Parliament, does have things it can do to mitigate some of the devastating effects of this UK energy crisis – both for households and businesses.

On Tuesday October 25th Patrick Harvie, Scottish Government Minister for Zero Carbon Buildings, Active Travel and Tenants’ Rights, opened a debate in the Scottish Parliament discussing the UK’s Bill. Although the UK Government has reserved power over Energy there are parts of its Bill which require consent from the Scottish Parliament.

Patrick Harvie said that the Scottish Government had identified 5 areas which required Scotland’s consent.

“Those provisions cover the reduction of domestic energy bills, the reduction of non-domestic energy bills, support for meeting energy costs and the regulation of energy markets. The first four of the five clauses—clauses 13, 14, 15 and 19—relate to support for consumers in meeting energy costs.”

He then went on to ask the Scottish Parliament to give its consent to the Bill because although it is flawed that the desperate need of people in Scotland to get financial help is more important.

The Tories in Scotland are fully supportive of the UK Bill and think that the time of 6 months for the limited price guarantee till 1 April 2023 is adequate for householders, businesses and other organisations.

The Energy Price Guarantee came into effect on 1 October 2022.

This new scheme will reduce the unit cost of electricity and gas so that a household with typical energy use in Great Britain pays, on average, around £2,500 a year on their energy bill, for the next 6 months.

On average usage a household will save £1,000 a year (based on current prices from October). Energy suppliers will be fully compensated by the government for the savings delivered to households. 

For an individual customer, the amount paid under the Energy Price Guarantee will vary depending on how much energy they use, where they live, how they pay for their energy and their metering arrangement. The £2,500 figure is based on a household with typical consumption on a dual electricity and gas bill paying by direct debit.

Ofgem

In Orkney the average cost of heating homes and businesses will far exceed the ‘average’ used as an example for the UK. Many householders in Orkney will be facing energy costs double that UK average.

The UK Bill highlights the development of renewables and nuclear power as the way forward. This is a view supported by the Labour party.

Commenting on the Bill, Colin Smyth, MSP Labour said:

“The lessons are that there is a need for a sprint for clean energy—solar, wind and nuclear—for energy efficiency and for a publicly owned energy fund, which the next Labour Government will deliver where others have failed to do so. There is also a need to de-link electricity and gas prices within a clear timetable so that we do not find ourselves facing the requirement for another piece of legislation in this area in the near future.”

Consequences for Renewables

There are aspects of the UK Energy Bill which will have consequences for the production of renewables – in particular community owned renewables.

Liam McArthur, LibDem Orkney Constituency MSP pointed out  the “unintended consequences” of the regulations in the Bill on the cap on profits that are made by renewables developments under renewables obligation certificates and the feed-in tariffs.

He used as his example Hoy Energy Ltd which remits all net profits from a 900kw wind turbine to the Island of Hoy Development Trust. In turn this funding is reinvested back into the local community through supporting a bus service, welfare officer and community centre as well as offering grants for other important community projects and activities.

Liam McArthur said:

“Whatever the rationale for capping the profits of older renewable developments, it is highly unlikely the intention was to undermine community-owned wind, solar and hydro projects. These tend to be charitable operations that invest any and all funds in projects delivering genuine community benefit.

“Unfortunately, in the understandable haste to bring forward measures in response to the cost of energy crisis, there is a risk that this Bill could lead to unintended and very damaging consequences for community-based projects. By applying this cap across the board, it also likely that communities will be unable to ‘repower’ turbines and safeguard revenues into the future.

“We cannot afford to take a one-size-fits-all approach to the application of this cap and UK Ministers must agree to exempt community-based schemes. Hoy Energy Ltd provides just one example at a local level of what could be put at risk if an exemption is not granted.”

Liam McArthur was assured by Patrick Harvie that this issue would be taken up by the Scottish Government. Patrick Harvie went on to say:

“The Scottish Government will continue to do what is within our powers to support people here in Scotland, but let us be clear that we need UK Government action, too—to ensure not only that all consumers can afford to heat their homes this winter, but that the UK Government tackles fuel poverty well beyond that timeframe and businesses can stay afloat.”

Scotland cannot regulate on energy prices. It cannot break the link between the gas and electricity prices either, which needs to be done with urgency.

The UK Energy Prices Bill is part of the UK Tory Government’s Plans to:

  • launch a new oil and gas licensing round, expected to lead to over 100 new licences.
  • lift the moratorium on UK shale gas production – enabling developers to seek planning permission where there is local support, which could get gas flowing in as soon as 6 months
  • drive forward the acceleration of new sources of energy supply from North Sea oil and gas to clean energy like nuclear, wind and solar
  • continue progressing up to 24GW of nuclear by 2050, with Great British Nuclear helping to set direction of getting new nuclear projects online in the UK
  • undertake fundamental reforms to the structure and regulation of energy market through recommendations from a new review of the UK energy regulation
  • launch a review to ensure we are meeting our net zero 2050 target in an economically-efficient way, given the altered economic landscape; chaired by Chris Skidmore MP and reporting by the end of this year, it will ensure delivering the target is not placing undue burdens on businesses or consumers

Click on this link for : Cost of living help, support and advice in Scotland

Image credit Martin Laird

Fiona Grahame

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4 replies »

  1. I look out my window at all those wind turbines – large and small – dotting the landscape and I think – why has my ‘lecci bill shot up? Why am I sitting here, indoors, typing, wearing a woolly jumper and a woolly weskit?
    (The weskit is because it isn’t as bulky as another jumper and so frees my arms for typing.)

  2. There are hundreds of thousands across Scotland thinking the same. Donning extra layers to keep warm.

  3. I don’t see any mention of tidal turbines here, why not? It is a more reliable, predictable and less environmentally impacting source than wind turbines and has no health effects on nearby local communities.

  4. Spare a thought too for the hundreds of folk on fuel oil for heating. We stay 19 miles from Glasgow and the oil heating fuel charges are horrendous too! Company Profits rising along with levels of poverty, something isn’t right!