EU Exit Could See Energy Costs Rise By £500m

Energy costs could rise by £500m a year if we leave the EU, the Energy and Climate Change Secretary will warn today.

Citing a report prepared last year by National Grid (LSE: NG.L - news) , Amber Rudd will say that if the UK voted to leave and was kicked out of the Internal Energy Market (IEM), UK consumers will face higher electricity costs and reduced security of energy supply.

In a speech promoting how she believes the UK is "stronger, safer and better off" staying in Europe, the Energy Secretary is also expected to say that remaining in the EU is also important for investment and jobs.

Addressing employees at an energy interconnector site in Kent, Ms Rudd will say: "Being in the EU helps us attract billions and billions of pounds of investment in our energy system and supply chain.

"Taken together, this investment helps support 660,000 jobs in the UK's energy sector."

She (Munich: SOQ.MU - news) will also highlight how countries like Russia use their gas supplies as a tool of foreign policy by threatening to cut off supplies or drastically increase prices.

"To put it plainly - when it comes to Russian gas, united we stand, divided we fall," she will add.

The IEM exists to foster a competitive energy market in Europe through transparency, regulation and consumer protection.

The National Grid report said if the UK were to leave the EU and be excluded from the IEM as a result, the effect is "likely to be negative" because costs for energy trading and importing electricity through the four main interconnectors would rise.

However, if the UK leaves the EU but is allowed to remain in the IEM, most of those costs would be mitigated, the report added.

It (Other OTC: ITGL - news) also noted that the risks for gas as a result of leaving the EU are "minimal in the nearer term".

Vote Leave's chief executive, Matthew Elliott, called Ms Rudd's claims "absurd".

The Out campaigner said: "It's quite extraordinary the extent to which the Government is willing to do down Britain in its desperate attempt to win the referendum."

The Vote Leave campaign suggests the EU makes energy bills more expensive and costs the UK about £350m a week.

Mr Elliott added: "If we want cheaper bills, less commission interference and the ability to spend our money on our priorities, then the safe option is to Vote Leave."