Last week was the final budget announcement before the general election on May 7th. George Osborne, the Chancellor of the Exchequer, announced several developments across all those involved in energy. These developments include oil and gas incentives in the North Sea, assistance for energy-intensive users, and support for the new tidal project in Swansea.
Oil and gas received the expected tax cuts due to the collapse of oil prices. There are already significant job losses within the industry. The Petroleum Revenue Tax was brought down from 50% to 35%. This reduction would, in turn, assist in finding more oil from existing oil fields and revive older ones where modern technology can extract the oil. Twenty million pounds would also be given to aid seismic surveys to look for more oil in the North Sea.
Additionally, transmission infrastructure legis-lation will be brought forward. The privatisation of offshore transmission networks has saved between £200-400m to consumers, this success will now be brought to the onshore transmission infrastructure. As network costs make up to 23% of a bill, if we see the same amount of savings, this will be welcomed help to offset the rising policy costs.
Energy-intensive users have lobbied hard to maintain their competitiveness and will receive compensation for the Feed-in Tariff charges that they incur. This is estimated to save them £25m for 2015-16.
Renewables were also mentioned but only in regards to the proposed tidal lagoon project in Swansea. The project is controversial in terms of value for money and environmental concerns. However, it is projected to provide 8% of the UK’s electricity demand. Consultations are expected to start soon with the government.
Overall the budget announcement was a confirmation of what we knew and it highlighted logical improvements to maintain the UK’s competitiveness, rather than any-thing controversial. We eagerly await the election and new drastic changes that may or may not happen. For any further details on the budget and how it will be affecting energy users, please do call in.
