An SSE executive yesterday warned that uncertainty over the government’s energy reforms could raise costs for customers.
Under the new Contracts for Difference (CfDs) scheme, renewable energy generators will receive a guaranteed price for the electricity they sell, regardless of the market price.
When the market price is lower, suppliers such as SSE will have to top up the difference, which will be paid for by levies on consumers’ energy bills.
Deirdre Powers, electricity market review (EMR) commercial project director at the FTSE 100 energy giant, told a Westminster Energy, Environment & Transport Forum conference that CfDs created “a new pricing risk” for suppliers, as the government had not told them how much they had to pay. As such, firms would have to price that risk into retail tariffs, she said.
“The lack of long term certainty is a political issue… about whether energy suppliers or tax payers should bear increasing energy costs,” Alex Harrison, energy lawyer at Hogan Lovells, told City A.M. “If governments tinker [in regulated markets] for short-term political reasons, there tends to be a price to pay and that may not be good policy or suit their long term politics.”