By Paul Homewood
Via Net Zero Watch:
Liz Truss has been sworn in as Britain’s new prime minister and will finalize a £100 billion package on Tuesday to tackle the UK’s energy crisis by capping gas costs to reduce bills for households. families and businesses.
The measures are a priority for Truss, who was appointed by Queen Elizabeth at the monarch’s Balmoral residence in Scotland on Tuesday after defeating rival Rishi Sunak for the Conservative Party leadership.
Under a plan being worked on by the Treasury, the UK government would subsidize the wholesale cost of gas, allowing suppliers to cap energy prices for households and businesses, leaving taxpayers with any increase in the energy market.
The Truss team says the package will provide protection from the biggest energy shock in decades, avert mass casualties for companies and lift millions of households out of fuel poverty. . It is unclear whether the limits for households and businesses will be set at the same level.
A senior official confirmed that Truss’ team is planning ahead of Thursday’s potential announcement: “There will be limits, freezes or guarantees on the wholesale gas market,” he said.
She will speak to the nation for the first time as Prime Minister in a speech from Downing Street at around 4pm, after which she will begin naming her cabinet.
The bailout will be a huge challenge to Britain’s struggling public finances as Truss has also promised tens of billions of pounds in tax cuts. It will be reimbursed through consumption or tax bills in the long run.
The bailout was discussed Monday night by energy executives and Jacob Rees-Mogg, who is believed to be the next business secretary.
Limiting gas prices will reduce wholesale electricity prices. Around 40% of UK electricity generation is generated by gas-fired power plants, which tend to set wholesale prices to the rest of the market, although other technologies such as wind produce electricity cheaply. than.
In the longer term, the new Truss government wants to completely decouple electricity from gas, a policy the EU is also pursuing.
Brussels also recommends EU member states take urgent measures to limit wholesale gas prices.
Full story
This is actually one of the options I’ve been looking at. It has the great advantage that, by reducing the wholesale price of electricity, it will put an end to the profits made by renewable energy companies and other non-gas generators.
It is therefore a way of subsidizing the electricity (and gas) market much cheaper than the solutions proposed by both the government and the opposition parties.
Of course, this is also a much simpler solution than reinventing the entire energy market the way I recently suggested. While this is something that must be done sooner or later, it will not solve the immediate problems.
In the long run, of course, we need to start boosting domestic gas supplies.
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