Can you explain the impact of the Electricity Market Reform on retailers?

The consultation on the Government’s proposals for Electricity Market Reform (EMR) closed on March 10, and retailers now await the outcome in a white paper. One major element of the EMR - the carbon-floor price - would be implemented in 2013, and there is concern that it will increase businesses’ energy bills. Essentially, industries will have to pay the Government for the right to pollute.

“The EMR proposes to incentivise the investment needed to replace Britain’s ageing power infrastructure,” says Npower director of industrial and commercial markets David Cockshott. “The reality, however, is that companies are concerned about the proposed reform, particularly in terms of the cost to business, and the impact it could have on the UK’s competitiveness in the global marketplace.”

In Npower’s research that was carried out before the carbon-floor price announcement, more than half of businesses surveyed thought it would lead to an increase in energy bills for businesses. “As many retailers have found themselves included in existing carbon reduction programmes such as the Carbon Reduction Commitment Energy Efficiency Scheme, many have concerns they will fall prey to yet another ‘tax’,” says Cockshott.

“Retailers may be concerned about the impact on their bottom lines”

David Cockshott, Npower

He adds that although retailers may be concerned about the proposals in the EMR and the impact of the carbon-floor price on their bottom lines, “it is clear that the changes the reform seeks to achieve in helping deliver a low carbon future for the UK needs the support of all businesses, including retailers”.