Spanish energy company Iberdrola’s boss has stated to the BBC that the UK’s price cap on energy isn’t working, and that the country is paying the price.

Ignacio Galan was the chief executive officer of Iberdrola which is the owner of Scottish Power. He spoke on the sidelines at a summit for government investments.

According to him, the BBC’s price cap decision was made “in a very special situation” in order to protect the consumers.

Galan said, “But when there is a change in the environment it does not work.”

We are now paying for the results. While you may be able to resolve an immediate problem in the marketplace, there is no way to fix them in the long-term.

“The price cap was created on a temporary basis and I do not know why it has been kept.”

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Galan was in London to attend the Global Investment Summit. This summit aims at attracting more foreign investment into the UK in particular green technologies.

Energy price caps are designed to protect consumers in the domestic market by restricting how much they can be charged per unit by energy providers.

A number of companies have been forced to close their doors due to rising gas prices. They are required to charge less gas than they buy.

When asked if the price limit was short-term politically motivated and has resulted in long-term market damage, Galan responded: “Yes.

“You must be careful. Every market is different and you can’t predict what will happen in another place if you make changes. Because the world is interconnected, people can be affected by it in many different ways.

Galan claimed that Ofgem in the UK was not responsible for examining profit margins at businesses. However, he added, “If there is sufficient competition, the markets will solve the problem.”

He stated that he believed the current high gas prices are temporary, and any decision to address the energy crisis in the future should take into account the long-term.

“I have been in the business for many years and sometimes we are faced with this type of crisis.” He said that the first thing to do is to not get nervous, and instead to make decisions to deal with a temporary problem.

It is difficult right now but will likely disappear within a few months. This is due to a lack of gas supplies. But it won’t be forever. It’s important to remain consistent in your approach.”

Galan urged the UK to become “much more energetic” when moving towards a low carbon future. He suggested that the UK accelerate the approval process for new power plants and speed up planning.

“Let us have a long term view, a vision that lasts, as I think the UK does, to help accelerate construction of new green energy plants and distribution networks. This will make the UK less dependent on oil and more dependent on its natural resources.”

Mr Galan’s comments came as Iberdrola confirmed plans to invest £6bn in offshore wind farms off the coast of Suffolk, which could create up to 7,000 jobs if the sites receive planning permission.

Galan claimed that UK investments are attractive because they offer “stability,” predictability, law enforcement, and an acceptable return.

Source: BBC.com

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