Utility Week

Utility Week 13th December 2013

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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Page 13 of 33

Review Analysis The hits and misses of 2013 It's been a big year for utility companies, and ends with energy taking an unexpected and unwelcome high profile. The Utility Week team takes a look back at some of the highs and lows. W hen Ed Miliband took to the stage at the Labour Party conference in Brighton in September, little did the energy industry know that life as they knew it was over. Miliband's "price freeze wheeze" may have provoked those in the know to accuse him of scribbling policy on the back of a fag packet, but it caught the public imagination. Miliband's approval ratings shot through the roof as he seized the "cost of living" high ground and the Conservatives and Liberal Democrats were left scrambling to catch up. The energy suppliers fought back, arguing that price hikes reflected the bundle of charges now generally known as "green levies", but including payments for the fuel poor and energy efficiency as well. After a few weeks of furious leaking, lambasting and internal struggles in the coalition government, chancellor George Osborne did an early Christmas turn as Santa Claus, handing voters an estimated £50 off their energy bills through a combination of watering down and extending green and social obligations on energy companies, shifting some charges into general taxation, re-announcing network price cuts, and rounding it all up to a nice even sum with a £12 per household government rebate. As Labour scoffed that the government was "giving in to" the energy suppliers, and the big six promised to scale back planned price rises, one thing was for sure: this one's going to run and run. Biomass It's been an emotional 2013 for the biomass sector. Under fire from environmental non-governmental organisations peddling concerns about the sustainability of burning "whole trees", the emerging industry became divided. The government confirmed coal-to-biomass conversions as a favoured renewable technology while killing off dedicated biomass power-only plants. As Drax switched its first burner from coal to biomass, those planning to build new biomass plants were left to scrap over the last guaranteed Renewables Obligation subsidies, which were capped at 400MW. A 12 | 13th - 19th December 2013 | UTILITY WEEK Thames Tideway Tunnel •  Subject to planning consent, construction will start in 2016 •  24 construction sites across London •  9,000 jobs will be created •  Cost £2.88 billion ✔ Hinkley point C ✔ year ago, the Department of Energy and Climate Change (Decc) estimated there were 1,000MW of such projects in the pipeline. At the last count just two, worth 73.5MW, had applied for support. What would have happened without all the policy uncertainty, we'll never know. Those hoping the capped Renewables Obligation would give way to renewed support under the successor subsidy regime were disappointed. In July's draft Electricity Market Reform plan, Decc said power-only biomass would not be eligible for contracts •  Planning permission for EDF's £16bn project granted on 19 March •  Investors can expect between £65bn and £80bn for the 35-year contract, according to analysts •  The government has agreed a strike price of £92.50/MWh for difference. It argued that biomass was not a cost effective way of cutting carbon. The Energy Bill As this final issue of Utility Week this year goes to press, Parliament is on the verge of signing off the Energy Bill. It cannot come too soon for the industry, eager to end the uncertainty that dogs the market. While it has generated much debate, the legislation emerges largely untouched by Opposition amendments. A broad-based campaign to add a 2030 decarbonisation

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