Utility Week

14 | 15TH - 21ST FEBRUARY 2019 | UTILITY WEEK Policy & Regulation This week Clark 'must intervene on network charging' Timing of charging reforms will leave providers of flexible generation out of pocket A group of six industry asso- ciations have attacked plans by Ofgem to recover residual electricity network costs through fixed charges on consumers, saying it will undermine the transition to a more flexible, low-carbon energy system. Ofgem is reviewing both residual charges (used to recover the sunk costs of the existing network) and forward-looking charges (used to fund investments in new capacity). However, the pro- cesses are being conducted separately, with the former kicking-off more than a year earlier than the latter. In a letter to energy secretary Greg Clark, the Renew- able Energy Association, Renewable UK, the Solar Trade Association, the Association for Decentralised Energy, BEAMA and Tech UK criticised the decision to revamp residual charges before doing the same for forward- looking charges, and urged him to intervene. They said the timings of the reform would leave a year or two gap in which providers of flexibility and stor- age would face higher residual charges, without seeing any benefits from changes to forward-looking charges. It called the decisions "contradictory to government's ambition to decarbonise the energy system and create a market for flexibility" and said all elements of the charg- ing system should be reviewed and any changes should be implemented simultaneously. Ofgem's reforms are intended to prevent customers from reducing their exposure to residual charges by using on-site generation, demand-side response or stor- age, and in doing so shiŒ the burden on to others. TG ENERGY Zero Carbon Homes could have cut bills The cancellation of the Zero Carbon Homes standard has so far raised energy bills by at least £120 million, according to a report from the Energy and Climate Intelligence Unit (ECIU). In 2015, the government scrapped plans to introduce a requirement the following year for all new homes to have net zero carbon emissions in their day-to-day running through a combination of onsite genera- tion and energy efficiency. The ECIU has calculated that if the policy had not been can- celled, occupants of new homes built since January 2016 would now be paying between £208 and £233 less on their annual energy bills. This is around triple the average intended £76 saving from the government's recently introduced price cap, the study says. ELECTRICITY Is half-hourly metering worth it? Ofgem has issued a call for evi- dence on its plans to introduce half-hourly electricity settlement for households and small non- domestic customers on the back of the smart meter rollout. The aim of the consultation is to gain a better understanding of how consumers are likely to be affected by, and respond to, half- hourly settlement. Of particular interest is the distributional effects on vulnerable customers. According to the document, half-hourly settlement will expose suppliers to the "true costs" of supplying electricity. This will create an incentive for suppliers to encourage custom- ers to shiŒ consumption to peri- ods when electricity is cheaper to generate or transport. Ofgem has asked stake- holders to give their views on the willingness and ability of different groups to adjust their usage in response to price signals and adopt new, enabling technologies. The deadline for responses is 29 March. ENERGY Brexit could blunt CCC's tongue Chris Stark, chief executive of the Committee on Climate Change (CCC), told MPs last week that the committee may have to curb the advice it offers aŒer Brexit if the proposed Office of Environmental Protection (OEP) uses its advice as a trigger point for court action. Currently, environmen- tal rules are enforced by the European Commission, leaving the CCC free to offer sometimes blunt verdicts on government progress on emissions reduction measures. Row over way sunk costs are recovered Political Agenda David Blackman "Brexit fallout continues to preoccupy Whitehall" Parliament has been told that it can't adjourn for its half term recess next week because of Brexit, even though there seems to be little sign of progress on the EU withdrawal process. But while MPs dither, the consequences of Brexit for the wider business of government are beginning to emerge. Alex Chisholm, the top civil servant at the Department for Business, Energy & Industrial Strategy, revealed last week that his officials are having to soŒ hydrogen strategy. Nevertheless it must be a worry that this work on potentially the thorniest topic in UK energy policy is behind schedule. And it adds to a sense that, across government, issues are being sidelined. The Brexit fallout will con- tinue to preoccupy Whitehall, depending on how messy the UK's exit from the EU turns out to be, aŒer 29 March. Sooner rather than later though, the government needs to restore its grip on the home front. pedal on some initiatives. These include policy work on the contri- bution that hydrogen can make to low-carbon heat, which is three to six months behind schedule. The smart meter rollout, how- ever, which has a more pressing deadline, has not been affected by any diversion of resources to Brexit-related activities, he said. Mike Helmsley, senior power analyst at the Committee on Climate Change, was sanguine about the delay on the depart- ment's work when he was quizzed about the delay at a Westminster Forum conference. He gave the department the benefit of the doubt, stressing that it is hard at work on its

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