MPs reject attempts to impose restrictions on energy 'subsidies'

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The government has faced opposition on all sides of the House regarding its plans to compensate energy providers for dips in the price of electricity.

A system of "contracts for difference" will set a guaranteed price for electricity - often called the strike price - and the government will pay the difference to the generator if the wholesale price of electricity falls below this.

The proposals are set out in the Energy Bill, which MPs debated at report stage on 3 June 2013.

Green MP Caroline Lucas referred to the coalition agreement, which had ruled out public funding towards the cost of nuclear power, and accused ministers of "ditching their commitments shamelessly".

"A subsidy means giving extra money to that technology; it doesn't matter if you've also giving subsidy to renewables. That is still a subsidy. You [the minister] should recognise that and therefore stick to the line of his own coalition agreement," she said.

Lib Dem Martin Horwood expressed his view that the nuclear industry has "a massive record of time and cost overruns" and put forward an amendment to establish an expert panel to supervise contracts for difference.

The contracts amount to "a kind of renationalisation of the power sector", according to Conservative MP Chris Heaton-Harris, who felt that they would encourage investors "to build assets that are fundamentally not economic".

Labour MP Graham Stringer said it would result in "guaranteeing profits for parts of the energy industry that it has chosen itself from a limited intellectual base".

'Robust evidence'

But Energy Minister Michael Fallon denied that there was any plan for a subsidy laid out in the bill.

"I don't see anywhere in this bill any reference to the word subsidy," he observed.

In defence of contracts for difference, he said: "Support should be set based on robust evidence and advice that demonstrates, for instance, that the level of support makes a project economically viable - and thus will attract investment."

Shadow energy minister Tom Greatrex reminded MPs that on contracts for difference, Labour had "argued strongly for an independent expert panel to offer transparency, expertise and, crucially, protection for consumers".

A statutory panel of the kind advocated by Martin Horwood would, he contended, "differ from the government's plan to set up a non-statutory panel, and would deal with the concerns that the non-statutory proposals do not go far enough".

But later, in a vote, MPs threw out Mr Horwood's amendment by 287 votes to 232.

An amendment in Caroline Lucas' name, designed to ensure nuclear did not receive more financial support than renewable energy sources, was defeated by 503 votes to 20.

A third division saw Labour's amendment, seeking a temporary exemption for carbon-capture projects from a government measure to limit carbon dioxide emissions, was rejected by 298 votes to 225.