(Updates with energy firm share price reaction, analyst
By Nina Chestney
LONDON May 18 Britain's Conservative Party will
introduce legislation to support shale energy development and
impose a household energy tariff cap if it is re-elected in
June, its election policy document showed on Thursday.
The Conservative government pledged last month to cap
standard variable tariffs, responding to voter discontent about
energy bills which have doubled in the past decade.
"We will introduce a safeguard tariff cap that will extend
the price protection currently in place for some vulnerable
customers to more customers on the poorest value tariffs," the
document said, without saying how many customers would benefit.
The Conservatives would also consider whether to extend the
cap to very small businesses, the document added.
Energy firms say higher prices reflect increased wholesale
costs and environmental levies. Utilities such as Scottish Power
and SSE have said a price cap could harm competition and should
only be set for a limited period.
Analysts at Jefferies investment bank said the move would
likely involve extending a cap that now covers users of domestic
prepayment meters to include other customers. It said the impact
on energy firms might not as big as initially thought.
Shares of energy suppliers Centrica and SSE
had risen by 4 percent and 2 percent respectively by 1326 GMT.
The policy document also said the Conservatives would
commission an independent review into the cost of energy, making
recommendations to keep costs low and ensure reliable supplies.
If re-elected, the Conservatives would also continue to
develop the shale energy industry in Britain and change planning
laws for shale applications, the document said.
The shale gas industry is still in its infancy in Britain
due to regulatory hurdles and public protests. Environmental
groups are concerned fracking could contaminate groundwater and
say it is incompatible with fighting climate change.
A planned shale wealth fund would be changed so a greater
percentage of tax revenues from shale gas benefited communities
around the extraction sites, the document said.
"Where communities decide that it is right for them, we will
allow payments to be made directly to local people themselves. A
significant share of the remaining tax revenues will be invested
for the benefit of the country at large," it added.
A new shale environment regulator would be set up to deal
with functions now handled by the Health and Safety Executive,
the Environment Agency and the Department for Business and
Energy and Industrial Strategy.
(Reporting by Nina Chestney; Editing by Edmund Blair)