Wednesday, 13 July 2011

The nuclear option may keep our lights on, but at what cost to the UK?

Chris Huhne proclaimed his energy White Paper as the biggest set of reforms to the electricity market since privatisation more than 20 years ago. He's probably right. Yesterday was the day Britain officially went nuclear, just 37 years after France.

Huhne's reforms are therefore good if you are the incumbent nuclear operator in the UK, but new entrants may struggle to gain a foothold. That's because the Coalition's reforms also represent the biggest muzzling of competition and market discipline since the end of state ownership.

Yet because of the disarray that energy policy has been allowed to fall into over the past 15 years, yesterday's proposals may be about the best set of policies we can hope for.

We know that avoiding the energy crunch (keeping the lights on, meeting green targets and securing supply) is going to be expensive. Huhne laudably admitted his reforms would add £160 to an average £450 annual electricity bill.

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