Utility Week

UTILITY Week 13th June 2014

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UTILITY WEEK | 13Th - 19Th JUnE 2014 | 17 Policy & Regulation This week Ofgem and Decc roles 'blurred', says Flint Labour shadow energy secretary says abolishing Ofgem is first step in delivering clarity The distinction between the role of government ministers and the role of Ofgem has become blurred, according to the shadow energy and climate change secretary. Speaking at The Economist's UK Energy summit in London, Caroline Flint said there needed to be "much greater clarity" between the role of government and the energy regula- tor. "We have ministers legislating on the number of tariffs a supplier can offer, and a regulator through its work on project discovery assessing the country's energy security," she said. "I would say that is the wrong way round." The solution to the overlap between the Department of Energy and Climate Change (Decc) and Ofgem is, according to Flint, "to streamline the regulator". "We need to pare back its administrative responsibili- ties on programmes like e-serve and get it focused on the job of protecting consumers," she said. Labour has promised to abolish Ofgem and replace it with "a tough new regulator" as part of its energy reforms – which include a proposed energy price freeze – should it get into power. Flint also said that although state involvement in the energy sector was "at its highest level since privatisation", this was needed to give businesses the confidence to invest. Labour would continue with the contracts for dif- ference and capacity mechanism auctions, Flint said, although the party would ensure demand-side measures could bid into future capacity auctions. MB ELEcTrIcITY Delays to EMR regs raise capacity risk Crucial regulations for electricity market reform (EMR) have been delayed, Utility Week revealed last week. Secondary legislation to deliver a new subsidy regime and capacity market was expected alongside the Queen's Speech on 4 June. However, Parliament's lawyers reportedly need more time to scrutinise the text. An industry source said the contracts for difference (CfD) proposals to support low-carbon generation are thought to be three or four weeks behind schedule. The capacity market, to promote security of supply by paying generators (primarily gas-fired plant) to be available, is believed to need even more work. The delay raised concerns the first capacity auctions, scheduled for December, may have to be put back. That would jeopardise the government's aim to deliver new capacity by winter 2018, extend- ing a forecast "capacity crunch". A Decc spokesperson said the secondary legislation and associ- ated documents are now expected out "in the second half of June". WaTEr Separate IP to build Tideway Tunnel The government has confirmed its plans for a separate infra- structure provider (IP) to construct the Thames Tideway Tunnel. The Department for Environment, Food and Rural Affairs (Defra) has stated that the supersewer is a specified infrastructure project (SIP), and as such prohibits Thames Water from conducting the main tunnel construction work. The project will be financed and delivered by an independ- ent IP, with its own licence from regulator Ofwat, which will "largely ring-fence Thames Water from the risks associated with the construction", accord- ing to Moody's. ELEcTrIcITY No concern over rule change at Dungeness EDF Energy's application to loosen safety limits at its 1GW Dungeness B nuclear power plant does not pose "any safety concerns", said the Office for Nuclear Regulation (ONR). EDF Energy has applied to extend the ONR limit on how much degradation can take place to the bricks surround- ing the nuclear core at its Kent nuclear site, in order to increase the operational life of the plant. Nuclear radiation causes the graphite bricks to degrade, with the current allowable "weight loss" limit set at 6.2 per cent. EDF Energy would like to see this limit extended to 8 per cent. Decc: getting in a muddle about policy Political Agenda Mathew Beech "The Lib Dems and Tories will cry 'we're not dead yet!'" The zombie government tried to take the opportunity of the Queen's Speech to show it remains "busy and radical". The Lib Dems' dead man walking and leader, Nick Clegg, was keen to point out his party's positive influence on the address in the wake of its massacre at the hands of Ukip in the Euro- pean and local elections. Prime minister David Cam- eron was also keen to show the electorate what the Conserva- tives have to offer – as he tries from the MPs' Twitter feeds and into reality. Climate change minister Greg Barker has also tried to turn his hand to resurrecting the Green Deal – the £50 million Home Improvement Fund is the latest initiative to entice householders into its grips. The government may be accused of being lifeless, waiting to be put out of its misery, but the Lib Dems and Tories hope to use this final year of the coali- tion to cry: "We're not dead yet!" to deal with the spectre that is Nigel Farage, who has been haunting him and his party for the past few years. The infrastructure bill was one of 11 pieces of legislation outlined as the coalition enters the death throes of its existence. This would allow, among other things, energy companies the right to drill horizontally under people's property without their permission and for a small compensatory fee. It is hoped – particularly by those of a bluer hue – this will unleash an abundant shale gas reserve, which will slash energy prices. This will take the #longtermeconomicplan away

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