Ed Davey: Investment from the Far East won't stop energy price rises

The UK's energy sector could be about to receive of a wave of investment from China, Japan and Korea but energy prices will still rise, says Davey.

by Gabriella Griffith
Last Updated: 04 Nov 2013
Britain’s nuclear energy plans are verge of a breakthrough: the government is about to sign a deal with France’s EDF Energy to start work on the new Hinkley Point reactor in Somerset. Speaking yesterday, energy secretary Ed Davey said we were extremely close to a deal, which could boost the UK’s dwindling power supplies and help to keep the lights on.
‘We're extremely close to a deal with EDF and if and when we get that deal I'll announce it to parliament and I think I'll be able to show that it's extremely good value for money for consumers,’ said Davey - we thinks the Davey doth protest too much.
The energy minister also hinted that we could be in line for a ‘massive’ wave of investment from the Far East, with interest in our nuclear and technology sectors from China, Japan and Korea.
According to reports, China General Nuclear Power Group could be interested in a 49% stake in the French-led consortium, which is looking to develop Hinkley’s new reactors.
‘The Chinese, along with the Japanese and the Koreans are very interested in the opportunities in the British nuclear sector,’ said Davey, apparently without his fingers crossed behind his back.
‘I think it is really possible we will see massive Chinese investment, not just in nuclear but across the board. I think we will see massive Japanese and Korean investment. It is really critical we get that investment,’ he added.

Well, now we know what Davey’s favourite word is...

As we trundle headlong into another winter, energy has become a hot political issue (pun totally intended). The coalition has come under fire from Labour, which has criticised the government for not doing enough to keep household energy bills down. Earlier this month, Labour leader Ed Miliband frightened the beejesus out of the UK’s energy companies, by threatening to freeze energy prices should his party win in the next general election.
But Davey has said energy price rises are inevitable.
‘We’ve seen a big increase in the network costs because we’ve got to replace ageing networks. So these are costs which are impossible to avoid,’ he said.
According to Davey, the cost of investing in nuclear energy will be passed onto consumers through a levy on bills, starting in the 2020s. He also expects ‘green taxes’ to make up a third of a family’s electricity bill.

‘People have got understand what these green taxes actually are. Most of them are actually social policies to help the fuel poor (people whose energy bills make up a significant chunk of their outgoings) manage their bills. I don’t think we want to get rid of those, do we?’ he said.

Supermarket boss Dalton Phillips has piped up to express his concern about the fallout from rising fuel prices.
‘The problem of high energy bills is a social problem because it is hitting the poor the hardest,’ the Morrisons chief executive told the Financial Times.

‘It’s like a tax, taking money out of people’s pockets without them being able to do much about it.’
You know something's up when the boss of a supermarket starts talking about energy. Will the Centrica boss start lecturing Phillips about how best to sell a pint of milk? Presumably Phillip's worried about his customers’ expendable incomes being eaten into. Spending 8% more on energy bills might mean spending 8% less on Morrisons’ bread and cheese…

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