The Government's draft energy bill announced today (22 May) by the Department of Energy & Climate Change (DECC) includes proposals for a radical reform of the electricity market and is designed to establish a legislative framework for delivering secure, affordable and low carbon energy.
To reform the electricity market, the bill will put in place measures to attract the £110bn needed to build new low-carbon capacity, upgrade the grid by 2020 and to cope with the rising demand for electricity. This includes provisions for Contracts for Difference - long-term instruments to provide stable and predictable incentives for companies to invest in low carbon generation; and Investment Instruments - long-term instruments to enable early investment in advance of the CfD regime coming into force.

In addition to proposals for a reform of the electricity market, it also includes provisions to enable the sale of the Government Pipeline and Storage System (GPSS) and on nuclear regulation.

DECC says the energy bill will also improve regulatory certainty by ensuring that Government and Ofgem are aligned at a strategic level through a Strategy and Policy Statement (SPS), as recommended in the Ofgem Review of July 2011.

Secretary of State Ed Davey said: 'Leaving the electricity market as it is would not be in the national interest. If we don't secure investment in our energy infrastructure, we could see the lights going out, consumers hit by spiralling energy prices and dangerous climate change. These reforms will ensure that we can keep the lights on, bills down and the air clean.'

However, critics say that the bill may lead to higher costs for consumers.

Speaking last week, Friends of the Earth's executive director Andy Atkins said: 'The Energy Bill is a once-in-a-generation opportunity to fix our broken energy system - and give some much-needed credibility to the Prime Minister's pledge to lead the greenest Government ever. The Government must support clean British energy to tackle rocketing fuel bills and generate new jobs and industries that could buck the double-dip recession.'

The draft bill will go before Parliament before being published in the autumn.

For more information visit www.decc.gov.uk