Utility Week

Utility Week 18th October 2013

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Policy & Regulation This week UK power capacity mechanism policy a 'threat' water to prospects for a single European energy market Rogerson expected to be water minister Oettinger hits out at policy nationalisation European energy commissioner Gunther Oettinger has blasted the UK's power capacity mechanism policy as a threat to prospects for a single European energy market. The commissioner slated moves by European Union member states that he claimed were In parallel: but strategy must be shared making energy policy in the bloc nationally focused rather than European. He said he was looking to a European market that included feed-in tariffs and capacity mechanisms, adding: "What I can't accept is 28 parallel capacity mechanisms – that would be the end of the internal market [in energy]. "We are working on European-ising our energy strategy, yet for various reasons national energy policies are moving towards the opposite," Oettinger said. "Sometimes I think we are taking two steps forward and one step back. Or even one forward and two back." Oettinger said a recent statement signed by the chiefs of ten energy companies – Eni, GDF Suez, Enel, Eon, RWE, Vattenfall, CEZ, Iberdrola, Gas Natural and Gas Terra – warning that EU energy policy was becoming regional, not European, was "entirely justified criticism". He said he had set up an "open-ended session" to be held "in the next few weeks" with those firms and the energy ministers from the countries where they had their headquarters. Oettinger was speaking at the unveiling of an EU initiative that makes €5.85 billion in funding available to European energy infrastructure projects. Among 248 "projects of common interest" that could be eligible for funding, the UK has an upgrade to the interconnector with France and a new link with Belgium. The new water minister is expected to be named as the Liberal Democrat MP Dan Rogerson. In last week's reshuffle, Rogerson was promoted alongside Tory MP George Eustice from the backbenches to a ministerial role within Defra – with Eustice initially named on the Defra website as the new water minister. However, Defra has not confirmed which MP will take up the role vacated by Richard Benyon, although Utility Week understands that within Westminster it is expected that Rogerson will. A spokesperson from Defra insisted that "it is not unusual" for it to take a couple of weeks to sort out the ministerial portfolios, adding "it is just one of those things". Neil Dhot, spokesman for Water UK, said the fact that the water brief has not yet been decided "is not a concern at all" because they know the minister will be Eustice or Rogerson. He added: "The [Water] Bill is there – we're about to have second reading – so we know exactly what the government's agenda is." Emissions CCS developers have been 'cast adrift' Carbon capture and storage developers are struggling to keep their projects alive in the face of a lack of government ambition, MPs heard on Tuesday. Industry experts told how three projects have been "cast adrift" by the Department of Energy and Climate Change (Decc). Speaking at a hearing of the Energy and Climate Change Select Committee, they warned failing to maintain momentum on CCS development could push up the long-term cost of cutting carbon dioxide emissions. Don Valley, Captain Clean Energy and Teesside commercial scale demonstration plans did not make the grade for a £1 billion government funding pot. White Rose and Peterhead were named the preferred bidders. Stuart Haszeldine, professor at Edinburgh University and director of Scottish CCS, said he was "very, very surprised" at the lack of engagement with those projects from Decc. "Those projects have been cast adrift and left floating." The developers behind Don Valley and Captain are attempting to make the investment case without a capital grant. They are seeking to negotiate a guaranteed power price with Decc under the contracts for difference (CfD) framework. Sam Gomersall, founding director of CO2Deepstore, which is working on the Captain project, said "there seems to be a certain lack of ambition in the engagement process with Decc". Political Agenda Mathew Beech Political infighting is under way within the coalition government, with the Tories and the Liberal Democrats taking opposing positions on the issue of green taxes. Prime minister David Cameron and chancellor George Osborne are looking at ways of reducing or removing the levies from bills. In fact, cabinet minister Oliver Letwin is said to have been in contact with the energy suppliers over what can be done to reduce the bills that their consumers pay. "The Tories and Lib Dems are opposed on green taxes" However, deputy prime minister Nick Clegg, energy secretary Ed Davey, and business secretary Vince Cable are reiterating the Lib Dem mantra that green taxes are necessary and will not be removed from bills. Clegg even said removing the green levies would result in energy bills going up in the long term: "What will happen is that you will have less investment, probably higher bills over time and an increase in fuel poverty. That cannot be the right answer." Cable added that removing the levies would be "shortsighted and foolish". Davey, the man with the energy brief in government – at least until 2015 – ruled out the removal of the green levies, saying they represented good value for money, and that the majority went on social policies to help the fuel poor. But something has to give, and with Labour taking the lead in promising consumers a price freeze, the Tories are eager to be seen to be taking action on the cost of living. Whether the Lib Dems can prevent this being at the expense of green subsidies is unclear. UTILITY WEEK | 18th - 24th October 2013 | 13

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