§ Mr. Peter DuncanTo ask the Secretary of State for Trade and Industry what steps are being taken to explain to UK electricity consumers the proportion of their energy costs due to the Renewables Obligation. [64347]
§ Mr. WilsonIn the statutory consultation on the Renewables Obligation, published in August 2001, it was estimated that its introduction would result in a maximum increase in average electricity prices of just under 5 per cent. by 2010 in comparison with 1999 prices. Actual costs arising from the Obligation will depend on what suppliers actually pay for any additional renewable energy supplies or for Renewables Obligation Certificates (ROCs).
In a competitive electricity market, it is for individual electricity suppliers to determine the price of the electricity which they provide to consumers. In determining those prices, suppliers will have to take account of a wide range of influencing factors, including any arising from the Renewables Obligation.
The buy-out mechanism operates to ensure that any extra costs arising from the Obligation do not reach an unacceptable level. Recycling of buy-out receipts will provide an incentive to further investment in renewables—thus helping suppliers to work towards reducing overall costs.