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Building competition in the energy market

October 7, 2013

This is the first in a series of posts from the MLEI Cambridgeshire coordinators at the County Council, looking at some of the contextual isues for the project. Do please use the comments sections to give us your feedback.

Ed Miliband’s’speech at the recent Labour Party Conference has kick-started a new public debate on energy, triggered by the proposal for a 20-month energy price freeze.

Labour’s proposal is intended as an interim measure whilst the bigger question of how energy markets in the UK are going to run over the next few years, is addressed. On the 25th September, an open letter issued by Mr Miliband to the energy companies aimed to provide more clarity on the matter, stating the first thing that needed to be done was to legislate, “to build competition and transparency into the market.”

So whilst debate rages on the likely impacts of an energy price freeze and whether energy companies will simply raise prices significantly before the freeze starts, the real question is, “where will greater competition and investment in the energy markets come from?”

It is increasingly recognised that local authorities have a role to play in the provision of energy services to their residents and businesses. Councils like Cambridgeshire County Council are already involved in energy decisions around planning, large contracts for the purchase of gas and electricity for public buildings and street lighting; the County, District and City Councils are also closely involved in the delivery of energy efficiency improvements to homes. More recently, including through the MLEI project, Cambridgeshire is looking at how it can support development of more local renewable energy infrastructure.

We are not talking about exclusive municipal provision of energy; there are many other models. For example, a new heat network set to go live shortly is being developed by Southwark Council with Veolia, a private company, taking heat from the SEL CHP energy from waste plant. Such a system will provide the delivery of cheaper heat to tenants and help protect against future price shocks when international gas prices spike. Last week Aberdeen Heat & Power, a community-based not-for-profit set up by the Council, scooped a Global District Energy Climate Award in New York. A key feature that impressed the international judging panel was the commitment to providing benefit to the community through affordable low carbon energy. The key point is that both are local and resulted from initiatives made by the local Council. We hope that future energy schemes in Cambridgeshire, supported via the financial mechanisms put into place by the MLEI project, can similarly generate power locally that also benefits local people. This might be through lower prices, more reliable supply or support for the local economy through jobs and business development.

With these sorts of projects in mind, it is possible to envision a future where energy is provided through a multiplicity of businesses – local, national and international – with a variety of delivery models. Not just the ‘Big Six’ energy companies. This will provide customers with real choices in a competitive market.

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