Energy bills for business electricity and domestic customers will have to at least double to make the construction of new nuclear reactors in the UK financially viable, according to reports.
Energy companies would need to achieve a wholesale price of £100 per
megawatt hour, over double the current price, to justify
investment in the plants, industry sources have told The Financial
A new generation of nuclear power stations forms the basis of the
government’s strategy to ensure the UK has a secure and low-carbon
energy supply into the future. But the cost of building the plants has
increased by £3 billion since last year’s earthquake in Japan.
“If you do the maths on that, you would conclude that £100 is the number
one would need to get a reasonable return,” a person close to the
negotiations on the level of government support energy companies should
receive to build new reactors told The Financial Times.
This week, a committee of MPs described the government’s planned energy
bill, which aims to facilitate the £110 billion investment needed to
replace the UK’s power plants, as so flawed that it was likely to scare
MPs have urged the government to reconsider the draft Electricity Market
Reform bill over the summer to include provisions for it to underwrite
the private investment required as an investment for power companies to
"The government is in danger of botching its plans to boost clean
energy, because the Treasury is refusing to back new contracts to
deliver investment in nuclear, wind, wave and carbon capture and
storage," said Tim Yeo, chair of the Energy and Climate Change
Ofgem, the energy regulator, has already warned that energy bills will
rise significantly by 2012 to cover the cost of upgrading gas and
The £22 billion programme is aimed at overhauling the network that
distributes electricity around the UK. Distribution costs typically
account for around 20% of a household gas bill.
Julian Morgan, managing director of the Energy Advice Line, the UK’s leading business electricity price comparison and switching service, said it was clear that there were tough times ahead for business electricity users.
“Whatever the outcome of the government’s energy reform bill, the amount
of investment required to upgrade the UK’s ageing power stations is
substantial and investors will requiring end-users to cover some of
those costs,“ Mr Morgan said.
“It is now more important than ever for small and medium-sized firms
to consider their energy spend very carefully as prices are inevitably
on their way up.
“This means analysing their business electricity consumption, plus the price they are paying and their energy contract arrangements.
“Many firms are simply throwing money away by failing to ensure they are
paying the best available market tariff and locking that in on a fixed
“We help businesses every day save considerable sums by searching the
market to find the best deals. And we follow that up with a contract
management service so that we can help firms with any problems they have
during their fixed-term contracts.”
The Energy Advice Line provides expert business energy advice to
organizations of all sizes in the UK and offers the easiest, simplest
and most reliable energy quotation service on the market.
The online service allows firms to input their details and with just a
few computer strokes generate the five best energy quotes from a
wide-ranging panel of business energy suppliers.
The Energy Advice Line also offers a free contract management service whereby a team of business electricity experts is available to help with ongoing questions or problems with the contract or energy supplier.
The service also includes a complementary renewal reminder service to
let firms know when their fixed-term contract ends so they know when to
give notice to their supplier and search the market for a cheaper deal.
For further information visit the Energy Advice Line at www.energyadviceline.com