Energy fund 'could face treasury raid'

Jan 28 - McClatchy-Tribune Regional News - Peter Campbell Daily Mail, London

 

A fund designed to protect families from rises in energy prices and guarantee investors' returns on costly generation projects is open to being raided by the Government, it was claimed yesterday.

The new body, funded through bills, will shelter households from soaring energy rates in the future, with any surplus earmarked to be returned to consumers.

But a clause has been put into the Energy Bill, which is currently being scrutinised by MPs, which allows the Government to take the money for its own uses instead, according to critics and energy firms.

Shadow energy minister Tom Greatrex said: "Any money that could be passed back to households should do so, rather than being raided by the Treasury.

'We need to make sure consumers get a fair deal and protect vulnerable customers from being ripped off."

The controversial measure was not included in the draft legislation, but has been added into the Bill currently being scrutinised by MPs.

It relates to a complicated arrangement designed to encourage power firms to build low-carbon electricity generators such as nuclear or wind by offering subsidies.

The changes are necessary to attract the badly-needed pounds sterling 110billion of investment in new generators to help keep the lights on, the Government argues. To protect consumers from rising energy costs, the Government will strike a deal to set an agreed price for the electricity.

This dictates the amount generators will receive for the power they produce.

If the market price of electricity is lower than the agreed amount, the Government pays the difference to the firm.

This guarantees company investors a reliable rate of return on the money they pump into the construction of the generators.

But if the price rises above the agreed level, the company must pay back the difference to the Government, which should then pass it onto consumers.

However, the clause, buried within the Bill states the surplus could be taken by the Treasury.

A spokesman for the Department for Energy said there was no intention to raise any revenue for the Exchequer through the measure.

But critics said it would still be possible to remove money that was owed to consumers.

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