Letter: Electricity market reform consultation

From: Lord Turner
To: Rt Hon Chris Huhne MP

I am writing to you in response to your consultation on electricity market reform. As you know, we have highlighted the need for new electricity market arrangements to drive sector decarbonisation, which in turn will drive economy-wide emissions cuts required to meet carbon budgets. We therefore welcome your proposals, which are consistent with the high-level recommendations in our advice on the fourth carbon budget. Specifically, we believe that new arrangements based on long- term contracts to provide more revenue certainty for investors (e.g. your proposed Contracts for Differences) would deliver the required investments at least cost to consumers.

As you move to more detailed proposals, there are four key points from our fourth budget advice which we recommend that you consider