Has the Government forgotten Business Energy Prices?

28th March 2013

Chambers across the country have complained that Government has forgotten business costs amongst the push to be seen to be controlling domestic prices.

Commenting on the Department for Energy and Climate Change's release of new evidence that links government policy decisions to rising business energy bills, Richard Wright Executive Director of Sheffield Chambers of Commerce, said: -The announcements today show that while ministers focus their attention on containing household energy bills, businesses are bearing the brunt of their policy decisions. -It is unacceptable that companies particularly the medium-sized firms that form the backbone of our economy are facing future energy prices that are 20-25 percent higher as a result of government policy decisions. This is especially crucial for our manufacturing companies, who are intensive energy users despite massive improvements in efficiency in recent years. -The government's own figures admit that its policy decisions alone will result in many firms paying at least 20 percent more for energy by 2020 and 40 percent more by 2030 in real terms. -At a time of global economic uncertainty, tough business conditions and low profit margins, ministers should be working to stabilise business energy costs, not push them up with each and every Whitehall policy change. -We need a comprehensive energy supply strategy that gives certainty of supply at the best price possible. -Ministers should also revisit the Carbon Floor Price, which is due to take effect in April, as it's a massive contributor to these unwelcome price rises. Climate change levy rates will increase in line with RPI from April 1, 2014 however the Government will introduce exemptions from the climate change levy for energy used in metallurgical and mineralogical processes from the same time. The Government is now seeking views from the industry on these exemptions and will publish draft legislation at the time of the 2013 autumn statement. Nick Tovey, Director of Wardell Armstrong, member of Sheffield Chamber Council and Chair of the LEP Sustainability Forum added: -The future cost of producing carbon is critical to our future energy policy and to the competitiveness of our high energy users. -The cost of producing carbon is translated into a levy so I'm pleased with the decision to exempt metallurgical processes which are very important to the Sheffield city region. -On the other hand if we don't set the cost of carbon high enough fossil fuels will always be much cheaper than renewables and the investment in a balanced energy production portfolio will not occur. -Bottom line is that the UK cannot act in isolation - it has to be a world-wide system which is why we have carbon trading. Good news is that London looks like it is establishing itself as the carbon trading centre of the world.