UK energy security bill paused to prioritise support for businesses

Jacob Rees-Mogg, UK business secretary, has put the government’s “energy security bill” on hold in order to prioritise legislation to provide emergency support for businesses.

Rees-Mogg has told officials that the existing bill — at present under scrutiny in the House of Lords — will be paused or even binned to reflect the new government’s priorities.

In the meantime, legislation will be drawn up as fast as possible to provide the framework for a fresh state energy support scheme for businesses, according to officials.

The energy security bill set out several reforms, including renationalising critical responsibilities for balancing Britain’s electricity and gas systems, which are at present held by the FTSE 100 company National Grid.

It would also allow for new financing models to encourage technologies, such as carbon capture and storage and the production of “low carbon” hydrogen, as well as the streamlining of some consenting processes for offshore wind farms.

The attempt to rechristen existing proposals is part of a wider drive by UK prime minister Liz Truss to emphasise the importance of economic growth in her new administration.

If the energy bill is abandoned, these reforms could be inserted into the existing “levelling up and regeneration bill” and then rebranded as a “growth bill”, although the precise mechanism is yet to be decided.

Truss last week announced a £150bn package of measures to shield Britain from soaring energy prices. The intervention will ensure that neither households nor companies pay more than a certain amount for their energy — after a sharp rise in wholesale gas market prices.

The price guarantee for households can be implemented under an existing regulatory system, but support for businesses is more complicated, requiring new legislation — as will the Northern Ireland element of the household support plan.

“Space has to be made for the ‘energy price guarantee’ legislation,” said one energy industry source familiar with discussions. “[It is] emergency legislation needing immediate space in both houses [of parliament] and powers must be in place by December.”

The existing energy bill could still make its way through parliament, albeit more slowly, although ministers are considering transferring its key elements to other pieces of legislation over the coming weeks.

Officials confirmed that elements of the energy security bill could be taken on by the Treasury or levelling-up department.

The business department said that scrutiny of draft legislation in the Lords was suspended after the death of Queen Elizabeth II. “We will update parliament on our plans when it returns from recess. We will not speculate on the content of future bills.”

Parliament will return from recess on Tuesday following the Queen’s funeral in London on Monday.

Under previous plans, ministers intended to add an amendment this autumn to the energy security bill to enable the decoupling of wholesale electricity prices from gas, in order to reduce energy costs.

Kwasi Kwarteng, chancellor and former business secretary, launched a consultation on how to reform the electricity market in July. Officials are keen to accelerate the overhaul, although some energy experts argue it could take years to enact reforms.

At present, Britain’s most expensive power generators set the price for the entire energy market, leading to accusations that some renewables and nuclear suppliers are making extraordinary profits from the surge in gas prices.

Additional reporting by David Sheppard