Patricia Hewitt, the new Trade and Industry Secretary, will this summer launch one of the most comprehensive reviews of the UK's future energy supply.
Designed to ensure that the country's electricity and gas needs are met for the next 20 years, the review could lead to a shift towards nuclear power and lighter regulation of privatised energy companies.
The Independent on Sunday has learnt that the review is at the top of Ms Hewitt's in-tray, and Department of Trade and Industry (DTI) officials are already working on the first draft of a consultation document.
Because energy spans so many departments most notably trade and the environment the Downing Street Policy Unit is also expected to take a key role in the review. Headed by David Milliband, co-author of the Labour Party election manifesto, it may have to act as peacemaker between the DTI and the newly created Department for the Environment, Food and Rural Affairs.
One potentially divisive issue is nuclear power. The Government is under pressure from Europe to reduce electricity generated by coal-fired power stations. Experts predict that nuclear and renewable fuels could take up the slack. The latest Labour Party manifesto takes a much softer line on nuclear power than the 1997 manifesto.
A senior government source added that the role of energy regulator Ofgem will be reviewed. Ofgem was heavily criticised by the Competition Commission last December for imposing tough new licences on the power generators, and there is a growing body of opinion that its strict regulatory approach is no longer appropriate in the deregulated market.Reuse content