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Power generation firms given £1bn pay out from Government


Power generation firms have received a close to £1 billion pay out from the government to ensure their plants stay open and to reduce the treat of power cuts in the coming years.

The pay out will also go towards building a large independent gas plant at Trafford, the Department of energy has said.

The amount paid will add around £11 to each average household energy bill, but nothing will be paid by consumers until 2018/19.

The Government has said that the pay out is to ensure that enough existing capacity remains available at the end of the decade, as well as looking at ways for further investment. The capacity auction (where the money was paid) is a way to ensure blackouts are prevented in peak periods of demand. Companies are being paid for promising to be available to plug any shortfalls which may occur. In return they will receive a steady payment on top of the electricity that they sell.

Secretary of State for Energy and Climate Change Ed Davey described it as "fantastic news for bill-payers and businesses".

There are criticism of the move, as campaigners have expressed concern that the investment means investment in newer, cleaner investments will waiver, and it will keep polluting coal plants on the system for longer.

Greenpeace UK energy campaigner Lawrence Carter said:

"Giving a cash bonus to already profitable power stations just to keep doing what they are already doing won't make Britain more energy secure in the long term. For this to happen we need investments in a modern, smart, flexible energy infrastructure"

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