The Fossil Fuel Levy is to be reduced dramatically once the nuclear element of the levy ends, due next year on privatisation of the nuclear industry. The levy will continue to support renewable energy, though, which currently receives only about 5% of the levy's proceeds. President of the Board of Trade, Michael Heseltine, announced his intention to abolish the nuclear part of the levy in 1996 when he revealed details of the forthcoming privatisation of most of Britain's nuclear stations. The levy, which raises money to pay for the extra costs of nuclear and renewable electricity, adds around 10% to electricity bills in England and Wales. In Scotland, where there is a different support mechanism, the nuclear premium will also end. Heseltine expects electricity prices to fall by up to 8% as a result. Only the potentially profitable advanced gas cooled reactors (AGR) and the new pressurised water reactor (PWR) at Sizewell B are to be sold off, while the ageing magnox reactors will stay in the public sector. According to Heseltine, recent improvements in the financial performance of Nuclear Electric and Scottish Nuclear mean the future private and public sector nuclear companies will need no further support from the electricity consumer.
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Senior Renewable Energy Analyst (WindGEMINI Product Lead) DNV GL Bristol (City Centre), City of Bristol