Brexit could bring 'electric shock' hike to energy bills, Energy Secretary warns

Energy costs could "rocket" by half a billion pounds a year if the UK quits the European Union, Energy and Climate Change Secretary Amber Rudd will warn on Thursday.

Pointing to a report by National Grid on the consequences of leaving the EU, she will say that the "massive electric shock" of Brexit could push up British bills by the equivalent of around £1.5 million a day.

Ms Rudd will also warn of the risk posed by Russian president Vladimir Putin hijacking the UK's energy security "as a political pawn to bring Europe to its knees", something which could be prevented if EU countries worked together.

The EU's internal energy market helps to guarantee energy security, which forms the bedrock of the UK's economic security, she will say, adding: "I'm not willing to play fast and loose with either".

The report by National Grid says the impact of Brexit is "very likely to be negative", with potential costs of up to £500 million a year as a result of issues such as less investment in interconnectors - subsea cables linking EU grids - and less energy trading.

If the UK leaves the EU but is allowed to remain in the internal energy market, most of those costs would be mitigated, the report says, and the impacts for gas as a result of Brexit are minimal in the near term.

But the cost of investment in badly needed new power infrastructure could rise by hundreds of millions of pounds as a result of market uncertainty.

Speaking to employees at an energy interconnector site in Kent, Ms Rudd will say that being in the EU helps the UK attract billions of pounds of investment in the energy system and supply chain, which helped support 660,000 jobs in the sector.

Working people would pay for the uncertainty created by Brexit with fewer jobs and higher prices, she will argue, describing it as "not a price I am willing to pay".

She will tell staff at the site: "The UK's membership of the European Union has helped keep our energy bills down.

"If we left the European internal market, we'd get a massive electric shock because UK energy costs are likely to rocket by at least half a billion pounds a year - the equivalent of British bills going up by around £1.5 million each and every day."

Even with the development of domestic shale gas, by 2030 the UK is expected to import three-quarters of the gas it needs, a risk as countries such as Russia use gas supplies as a foreign policy tool.

"We can't let our energy security be hijacked as a political pawn to bring Europe to its knees. By working together in the European Union each member state can stop this becoming a reality."

Ms Rudd will say the bloc of 500 million people could use the power of the internal market to source gas from elsewhere and drive down import prices, adding: "When it comes to Russian gas, united we stand, divided we fall."

Vote Leave chief executive Matthew Elliott said: "Amber Rudd's absurd claims simply aren't backed up by her own research.

"It is 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 said the EU cost the UK £350 million a week, and made energy bills more expensive due to regulation.

"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."

Go Movement executive director Alex Deane said: "This is the Government's Project Fear taken to a whole new level.

"The UK has one of the highest carbon resources in Europe. Putin does not have the power to switch off the lights in Britain, as the Energy Secretary implies. In any case, we can't decide our nation's future based on whether we think Putin will smile or frown.

"In terms of investment, if we were no longer members of the EU, we would have £14 billion a year to invest as we choose, including in energy generation.

"The Energy Secretary suggests the EU benignly doles out money to the UK out of an investment pot. This is simply not the case. All investment in the UK is on a commercial basis and highly profitable to the investor.

"Look at French firm EDF's proposed nuclear reactor at Hinkley Point. The UK government has pledged to pay EDF triple the current wholesale price for 35 years. The idea that companies like EDF won't want to make this sort of lucrative investment post-Brexit is ludicrous."