The EIUG position paper sets out the cost of various levies and obligations on electricity suppliers and various stakeholder views on how to ‘rebalance’ them. The EIUG’s position is for the Government to rebalance these costs to the Exchequer, and not on to gas prices.
Whilst the role of gas in electricity generation is expected to decline as the UK shifts to clean energy sources, gas continues to remain a vital energy source for, now not only to heat most homes but also as a source of heat for energy-intensive processes and a source of raw material to manufacture essential products, such as chemicals for plastics, fertilizers, and other products.
The EIUG recognises that the Government is taking steps to reduce the industrial electricity price gap through the British Industry Supercharger scheme, though further progress is still needed and not all energy-intensive industries in eligible sectors benefit. However, moving the cost of levies and obligations onto gas prices will significantly increase gas prices relative to other countries, putting gas-intensive industries at a severe competitive disadvantage internationally. Had such a move been implemented in 2024, it would have driven a 44% increase in industrial gas prices.
The EIUG does not support moving the cost of levies and obligations on to gas prices. If the Government were to pursue this option then it should also establish from the outset equivalent exemption schemes for gas intensive industries, mirroring those already available for electricity-intensive industries to safeguard their ability to compete internationally.