Utility Week

Uberflip 15 11 13

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Policy & Regulation would appear to include the sort of contracts for difference mechanism envisaged under Electricity Market Reform (EMR), particularly for technologies approaching maturity. The Commission also puts forward best practice guidance towards the "Europeanisation" of support schemes, including the acceptance of energy supply from other member states in national support schemes or through the creation of cross-border support schemes. The Irish Energy Bridge, which seeks to connect 5GW of offshore wind in the Irish Sea to the UK transmission system, appears to be a perfect example. The Commission provides guidance (and a checklist) for member states to use both to justify intervention and to choose the intervention mechanism. Member states are encouraged to address regulatory or market failures that cause or may exacerbate generation adequacy concerns, such as the effects of wholesale and retail price regulation; the potential for modifications of renewable support mechanisms to help ensure generation adequacy; the potential to help ensure generation adequacy by implementing effective intraday, balancing and ancillary services markets and removing obstacles for demand side and storage participation in those markets; and structural solutions to address problems of market concentration leading to underinvestment. In a further nod to cross-border participation, the Commission says capacity mechanisms should be designed to be open to all capacity that can effectively contribute to meeting generation adequacy standards. On choice of instrument, the Commission says a strategic reserve or a credible one-off tendering procedure is normally less distortionary and easier to implement than market-wide capacity mechanisms unless there is clear evidence that they are unsuitable. It also suggests that mechanisms based on capacity payments do not ensure that the identified adequacy gap is filled and create significant risks of overcompensation. Finally, on allocation of costs, the Commission says costs of capacity mechanisms should be allocated, in a transparent and non-discriminatory manner, to consumers in proportion to their contribution to demand during periods of scarcity or system stress. The Commission plans to launch a public consultation on the draft text for the revised EU guidelines on state aid in environmental and energy cases for 2014-20 (EEAG) shortly, and the outcome of the debate launched by the guidance as well as responses to the consultation will be taken into account in finalising the EEAG later in 2014. In parallel, the UK will be trying to obtain approval from the Commission on elements of its EMR programme under EU state aid rules. Gordon Downie and Joanne McDowall are solicitors in the Energy and Natural Resources Group of Shepherd and Wedderburn Big bonuses Sam Laidlaw Centrica (2012) Salary £950,000 Bonus: £1.04m Vincent de Rivaz EDF (2012) Salary £1.3m "Just to continue in this world where households are under pressure… is not the way thoughtful remuneration committees think about it." Sam Laidlaw, Centrica Paul Massara Npower (2013) Salary £600,000 Bonus £150,000 Keith Anderson Scottish Power (2012) Salary £503,000 Bonus £500,000 Alistair Phillips-Davies Johannes Teysson SSE (2012) Salary £545,000 Bonus (annual incentive) £206,000 Eon (2012) Salary £1m Bonus £2.2m 'All the people at the top of these big energy companies should reflect on what they are being paid' Caroline Flint, shadow energy secretary £156m My bonus is linked to my performance… If we don't deliver, we don't get a bonus Biggest bonus, in 2008, to a Wall Street trader Ed Davey, energy minister Bonus shunned by Tesco boss Philip Clarke in 2012 after poor trading in the UK £372k 7% Dorothy Thompson, chief executive of Paul Massara, Npower biomass generator Drax Fall in average bonuses in 2013 for FTSE1000 chief executives – but still £905k UTILITY WEEK | 15th - 21st November 2013 | 17

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