Businesses could leave UK over power costs, says CBI

THE Confederation of British Industry (CBI) has warned that energy reforms could force some companies to leave the UK.

The Government’s energy white paper has set out plans for £110bn investment in electricity generation which will involve replacing a quarter of the UK’s power stations by 2030 and increasing nuclear and renewable energy sources.

But John Cridland, the CBI’s director general said the extra costs could prove untenable for businesses that use a lot of power.

“Some energy intensive industries are already on a knife edge, and without help to shield them from new measures like the carbon floor price, they could struggle to stay in the UK.”
 
He added: “We have long called for our electricity markets to be reformed. The Government’s package contains some good measures, including its decision on feed-in tariffs. But these need to be made to work.
 
“More detail is needed on tariffs, and the case must be made for a capacity mechanism. We need a clear decision on both by the end of the year to avoid damaging investor confidence.

Meanwhile, Electricity North West, the Warrington-based organisation that handles the distribution of electricity in the region, has urged the Government to create better conditions for investment in distribution networks.

Chief executive Steve Johnson said massive capital investment was required to build new infrastructure that can carry increased loads demanded by homes and businesses.

“Much of the Government’s recent strategic focus has been on capital projects to increase energy generation. However, there’s no point in increasing the amount of electricity generated if it can’t be distributed to end users,” he said.

“Enabling financing for capital investment in extended distribution networks must be a key focus for [the regulator] Ofgem. Electricity North West and other network operators have significant concerns about the environment Ofgem is creating for equity investors in networks. Although the regulator has listened to our concerns, there is still some way to go as Ofgem seems to believe that it can extend the periods over which investors are repaid without raising the costs of capital.”