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News

Could Britain have the lowest energy prices in Europe?

The Conservative manifesto set a goal for Britain to have the lowest energy prices anywhere in Europe – a target it plans to achieve with reforms to shale gas extraction, alternative energy sources and its somewhat reformed price cap idea. As part of its commitment to delivering a sound industrial strategy the Conservative manifesto said: “We want to make sure that the cost of energy in Britain is internationally competitive, both for businesses and households.” Renewed support for shale gas extraction was one of the big commitments that stood out from the manifesto’s energy section. The planning process for new shale developments would be streamlined, reducing the regulatory burden on suppliers. A Conservative government would also, if elected, give more national money to local communities to try and overcome grassroots opposition to fracking projects. The manifesto suggests that Britain could seek to copy the American model of fracking model as it tries to rebalance its economy. It read: “The discovery and extraction of shale gas in the United States has been a revolution. Gas prices have fallen, driving growth in the American economy and pushing down prices for consumers. The US has become less reliant on imported foreign energy and is more secure as a result. And because shale is cleaner than coal, it can also help reduce carbon emissions.” The manifesto also included support for more wind farms on the Scottish islands, despite Conservative opposition to offshore wind. One notable omission was a position on nuclear power. The only time it was mentioned in the document it said that the party has strengthened ministerial scrutiny of foreign ownership of civil nuclear power plants – a possible reference to Theresa May’s delay on the approval of a new Hinkley Point plant last summer. Nuclear energy is a reliable energy source providing on-demand baseload electricity around the clock. Although alternatives like wind energy and solar energy are getting cheaper, energy supply is less reliable. Failing to invest in nuclear energy could affect the stable supply of energy in the future and cause costs to increase.

Will the energy price cap affect businesses?

Before the Conservative party released their manifesto, one of the only energy policies that we saw was Theresa May’s commitment to tackling domestic energy prices with a cap enforced on standard variable rates. This move threatened to send shockwaves through the energy sector and could have potentially lead to energy suppliers attempting to recover costs from elsewhere – including the non-domestic sector. The policy committed to in the manifesto, however, appears to have been watered down from its original intensity. Theresa May had hinted at a strict, market-wide price cap on all standard households. She also talked about 17 million customers saving £100 each. But the wording of the actual policy is vague and does not specify the number of customers who would save or give an indication on how much they would be expected to save. There were concerns that the price cap could seriously limit competition in the energy market and could result in some of the best energy tariffs being withdrawn from the market as suppliers tried to recover more of their costs. Potentially, this could make prices more expensive for businesses. A gentler price cap reduces this risk. The concessions made on shale extraction could also ease some of the upward pressure on business energy prices. Other good news for small businesses included in the phrase that: “we will consult on how to extend our safeguard tariff cap to micro-businesses.” Make your business energy prices cheaper with Utility Helpline.



Published by Utility Helpline on (modified )