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Utility Week 18th April

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12 | 18th - 24th April 2014 | UtilitY WEEK Policy & Regulation This week Tougher price control for NI Electricity NIE must cut its network charges and finance its investment more efficiently, says Commission Northern Ireland Electricity (NIE) must cut its network charges and finance its investment more efficiently, the Competition Com- mission (CC) ruled on Tuesday. The regulated network com- pany's decision last year to reject the price settlement offered by the Utility Regulator for Northern Ireland (UR) backfired. The sub- sequent referral to the CC (now part of the Competition and Markets Authority) resulted in tougher conditions. The CC cut the amount of revenue NIE is allowed to raise by 6.42 per cent compared with the UR's final deter- mination. That will result in a £10 cut to the average annual household bill by the end of the four-year price control in September 2017. NIE must also refund custom- ers for the higher charges levied while the CC made its assessment, as the previous price control was extended. In a move with repercussions for UK network com- panies, the CC also reduced NIE's allowed returns to investors. It said the weighted average cost of capital should be 4.1 per cent, down from 4.55 per cent in the UR's assessment. Martin Cave, leader of the CC inquiry, said: "We think we've struck the right balance between keeping bills down for customers and allowing for the investment necessary to maintain and improve the network. [Customers] should also receive a refund as a result of the readjusted charges." NIE welcomed the publication. A spokesperson said it would bring the Northern Ireland regulatory frame- work closer to that applied by Ofgem in the rest of the UK, which NIE "fully supports". MD Emissions 'Act fast on climate to make it affordable' Tackling climate change is affordable if all countries act fast, according to the last in a three-part series of landmark reports from the UN. Ambitious action to cut greenhouse gas (GHG) emissions would reduce global GDP growth by just 0.06 percentage points a year, the Intergovernmental Panel on Climate Change concluded. Delays to action or limits on the technology available would increase the price tag, according to the report, which represents a summary of the best available scientific evidence. Emissions rose more quickly between 2000 and 2010 than in any of the three previous dec- ades, the report's authors found. To have a "likely" chance of limit- ing the global temperature rise to 2 degrees Celsius, GHG emissions must be cut from 2010 levels by 40 to 70 per cent mid-century. EnErgY Scots independence 'no risk' to supply Scottish independence would not increase the security of supply risk for the rest of the UK because coal, gas and wind generation would fill the gap, according to a government report. The analysis published by the Department of Energy and Climate Change (Decc) on the impact Scottish independence would have on the UK energy sector, stated that Scottish gen- eration is not essential to keep the lights on, as claimed by the Scottish Government. The report said only 4.59 per cent of electricity demand is met by generation sources in Scot- land, with energy exports occur- ring "typically when windfarms are generating". This shortfall would not be an issue for the rest of the UK because wind imports from Scotland reduce "the need to generate power from coal and gas fuelled power stations". ElECtrICIty EU rules could limit community schemes New rules from Brussels could thwart the UK government's community energy ambitions. In a drive to cut the cost of renewables, the European Com- mission on Wednesday updated state aid guidelines to bring in competition for subsidies. Under the new guidelines, community-scale solar and hydro schemes could be forced to compete with larger develop- ments in the contracts for dif- ference (CfD) regime instead of receiving a feed-in tariff (FIT). The changes affect all renew- able projects between 1MW and 5MW except for onshore wind, which conversely could see eligi- bility for FITs extended to 6MW. Cave: 'we think we've struck the right balance' Political Agenda Mathew Beech "UKIP's energy policy says climate change is not real" The Conservatives are running scared. Not from Ed Miliband et al, but in fact from dissenters among their own ranks, and the threat of Tory defectors falling for the charms of UKIP. While most disenchanted vot- ers tend to find favour with Nigel Farage's stance on Europe – "We want out. Now." – there is the chance UKIP's threat could be affecting energy policy as well. The Tories have already dropped substantial hints they oppose onshore wind, and their the planet", though the IPCC would not agree. With the Tories set to finish third behind UKIP in the immi- nent European elections, they will aim to tempt back voters for the 2015 general election. This is likely to be with a tougher stance on Europe, but with growing calls to kick wind generation offshore, we have to hope that the manifesto writ- ers at Tory HQ don't decide to browse Farage's fantasy energy policy for inspiration. affection for shale gas is well known too. But they (mostly) acknowledge climate change and the impact of carbon emissions. A quick glance through UKIP's energy policy shouts that wind power is bad, climate change is not real, and renewa- bles are expensive and cost jobs. The UKIP solution to combat falling capacity margins and rising prices is three-pronged: British nuclear power; British shale gas; and British coal. British coal for British power, and to hell with climate change science – they don't believe it is real anyway, and actually state that higher carbon emissions are good for crop growth and "green

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