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 16 of 33

Policy & Regulation This week Chancellor's Autumn Statement under fire for lack of action on domestic energy efficiency Osborne blasted for 'missing open goal' George Osborne has been accused of "missing an open goal" by failing to boost the energy efficiency of UK homes, in the Autumn Statement. The chancellor confirmed a £50 reduction in household energy bills this winter – achieved by cuts to the Energy Housing: poor insulation is the real problem Company Obligation (Eco). Age UK welcomed the cut but added: "A far better strategy would be to focus on improving energy efficiency." Caroline Abrahams, charity director at Age UK, said: "The chancellor has missed a major opportunity to tackle the root cause of the problem – the UK's poorly insulated housing stock." Consumer Futures also supported the transfer of some levies from energy bills to general taxation, but director Adam Scorer said the £50 reduction this winter "will not change the lives of the millions of people suffering fuel poverty". He called for the chancellor to use funds from the carbon floor price to fund a "truly ambitious and strategic energy-efficiency programme". Osborne said the £50 cut would "support the lowest income families" and that it "doesn't add a penny to the tax bill". But shadow chancellor Ed Balls said bills would still be going up by £70 this winter and that "for millions of hard-pressed families, pensioners and businesses across our country, nothing less than a price freeze will do". Osborne also announced a tax break for shale gas developers, halving the amount of tax they would pay on their "early profits". MB Energy Commission mulls supply reserve The EU carbon market must have supply-side flexibility if it is to drive investment, delegates at a Westminster Forum seminar in London heard last week. A reserve of allowances triggered by oversupply is one of the structural reforms to the EU Emissions Tading System (ETS) under consideration by the European Commission. Others include retiring some allowances early and increasing the "linear reduction factor" that changes the cap on emissions each year. Pierre Dechamps, energy and climate adviser to president Barroso at the Commission, said: "The EU ETS is untypical as a market mechanism because demand varies but supply is fixed. To give flexibility to the supply side would make sense." Energy Suppliers to limit SME back-billing All major energy suppliers have promised to limit back-billing of small businesses to one year after Ofgem raised concerns. British Gas, EDF Energy, Npower, Scottish Power, First Utility, Good Energy and Opus will introduce the limit by the end of 2013 or "as soon as practically possible in 2014", the regulator said. Eon and SSE have already set such a limit. The voluntary commitment builds on planned Ofgem regulation to enforce standards of conduct for energy suppliers. Philip Cullum, consumer partner at Ofgem, said: "Our reforms place a general duty on suppliers to treat smaller businesses fairly in a range of key areas, including back-billing. "But we also wanted more specific commitments on limiting back-billing so we welcome the new arrangements." Water SWW and UU will not reduce leakage South West Water (SWW) and United Utilities (UU) are the only two major water companies proposing not to reduce leakage levels between 2015 and 2020. In their business plans submitted to Ofwat, SWW said it planned to continue to deliver its 84 megalitres a day target and UU said it would maintain leakage at 2014/15 target levels. Both companies said levels were below the Sustainable Economic Level of Leakage. Jacob Tompkins, managing director of Waterwise, said: "Most companies have found a way to continue to reduce leakage while keeping bills down. Given the pressures on resources, and climate change, it is surprising UU and SWW have not also been able to do that." Political Agenda Mathew Beech The Autumn Statement grabbed the headlines last week – before George Osborne even had the chance to address the House of Commons. Leaks and announcements before the chancellor's statement last week meant there were few surprises, and Osborne confirmed Decc's plans to knock £50 off energy bills this winter. His opposite number, Ed Balls, pointed out that bills will still rise by £70, and attempted to push Ed Miliband's price freeze, "Osborne is determined to keep the carbon price floor" saying "nothing less will do". Missing from Osborne's statement was the carbon floor price – which is set to rake in more than £3 billion by 2016. Despite pressure from industry before the Autumn Statement, and cries of despair afterwards, Osborne is determined to keep the carbon floor price. Pressure to scrap it, or reinvest the funds, will now focus on the next Budget. MPs also got to play Energy Bill ping-pong as they got the chance to reject an amendment calling for a tougher Emission Performance Standard, which would limit the running of old coal-fired power stations. Energy minister Michael Fallon said the amendment was not necessary and "risks deterring any investment". Shadow energy minister Tom Greatrex seized on divisions in the coalition, highlighting that Lib Dem peer Lord Teverson moved the amendment but that Fallon had "won the battle with his coalition colleagues" in calling for them to reject the amendment. It was voted down by 318 votes to 236 and the Bill has returned to the Lords. UTILITY WEEK | 13th - 19th December | 15

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