Trust and transparency to aid green future discussed by UK energy firms

Delegates at the UK Electricity Market Reform oral evidence session, on Wednesday (2 February), highlighted trust and transparency as key issues, if a decarbonised and secure energy market is to go forward.

Sara Vaughan, Director of Regulation and Energy Policy, E.ON, said the company is aware of a fundamental question from the public – why energy companies would want them to use less energy.

Vaughan said E.ON is trying to be honest – indicated by town hall meetings and internet communications, which conveys that the company has its eye on long term profits, achieved through securing more customers. Financial business accounts are being published separately to improve transparency, she added.

The public are increasingly aware of lobbying and PR from businesses, which may conceal their agenda. They are also wary that revenue losses incurred by energy companies, from greater energy efficiency, may lead to higher household bills.

The board scrutinised representatives of the six main electricity suppliers in the UK. It asked whether Ofgem are right to say price rises will lead to higher corporate profit.

Ian Marchant, Chief Executive of Scottish and Southern Energy (SSE), said: “I would argue that the analysis is flawed…They don’t look at other additional costs.”

Firms’ commitment to the UK market was also examined. The Commission asked whether businesses are looking eastward for investment rather than in Europe.

Vaughan responded that E.ON is seeking only 25 per cent of its profits from markets outside Europe. Investments in the UK include the Horizon nuclear power project and London Array, the world’s largest offshore wind farm.

SSE is investing 100 per cent in the UK and Ireland, said Marchant. “We’re looking at the North sea,” he said. Although fossil fuels from the North sea could secure further UK energy security, this is controversial given the pressure to reduce greenhouse gas emissions.

UK renewable targets pose a requirement for 15 per cent of energy to come from renewable sources by 2020. Transparency in the market is fundamental to achieving renewable targets as well as energy efficiency.

According to the Renewable Energy Foundation (REF) Initiative 2010-2011, some data and important information from energy companies, is not released into the public domain. REF reports that generation and supply must be regulated by open competition to ensure efficiency. They argue that for such a competitive mechanism to function, all the costs imposed on customers by generators should be transacted through a transparent market. “At present this is not the case,” it states.

“I agree trust is a key issue for this business going forward,” said Vaughan. Marchant said that electricity firms must work more collectively.

Author: Marianna Keen | Climate Action

Image: http://underclassrising.net/ | Flickr