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12 | 12th - 18th December 2014 | UtILItY WeeK Policy & Regulation Water availability must be at the heart of policy and planning decision-making to ensure sus- tainable supplies for the future, according to Water UK. Speaking at a Chartered Institution of Water and Environ- mental Management debate on Wednesday, Water UK's director of environment Sarah Mukherjee warned that the water sector is working around plans that do Water 'Put water availability at the heart of planning' not consider water supplies. She said the whole industry "has been incredibly good" at managing increasing demand from new developments and increased consumption, but warned the "solution clingfilm will only stretch so far". Mukherjee added: "When we talk about building new commu- nities, the first question we ask is not, 'where is the water?' It's normally, 'where is the economic growth?' assuming the water will arrive – somehow." Mukherjee called for water availability to form a more cen- tral role in planning decisions. She said: "We need to think about water availability, how we plan, how we husband it, and how we capture increasingly heavy winter rainfall as and when it comes." This week Legal challenge will not delay auction Decc says capacity market auction, scheduled for 16 December, meets europe's state aid rules The government will move ahead with its plans for the first capacity market auction despite a pending legal challenge against the regime which has increased the financial risk for auction participants. The capacity auction is due to begin on 16 December to secure generation capacity for delivery in four years' time, but new energy company Tempus Energy has lodged a legal challenge with the European Court saying the regime discriminates against demand- side response technologies. If the legal challenge is successful, the auction result would be nullified retrospectively, which could take a heavy financial toll on developers that move forward on investment plans in the meantime. That in turn would leave the government open to further legal action. "The European Commission has concluded that the capacity market is within European state aid rules," a spokesman for the Department of Energy and Climate Change said. "This challenge will have no impact on the running of the capacity auction in December." Intergen director Chris Elder told a select committee hearing on Tuesday that a successful legal challenge from Tempus would pose a financial risk for the opera- tors of plant that was successful in the auction. Other energy market participants facing the commit- tee said their concerns about the structure of the auction were not so great that the process should be delayed by legal wrangling. Tempus Energy's chief executive Sara Bell brushed off speculation from Labour MP John Robertson that her newly formed company was created solely as a vehicle for mounting a legal challenge. JA Gas UK pledges £36m to shale industry The UK government will offer a £36 million funding boost to the nascent shale industry for the next tax year, through invest- ment in research test centres and public engagement. Chancellor George Osborne's final Autumn Statement said the government would be "taking steps to ensure the UK leads the way with shale gas regulation" by allocating £31 million in funding for "subsurface research test centres". The test centres, to be funded through the Natural Environment Research Council, will produce research relevant to both the shale and carbon capture and storage industries, the statement said. The government will also fund a £5 million drive to "ensure the public is bet- ter engaged" with the shale development regulatory process through independent evidence on "the robustness of the exist- ing regulatory regime". Also, Osborne confirmed plans to establish a long-term investment fund for communities in the north of the country host- ing shale development, using revenue from shale tax to ensure the economic benefit to the area continues for generations. The ra of measures may help to bolster public acceptance of the controversial process of extracting shale oil and gas from onshore reservoirs. A vocal back- lash from communities opposed to fracking has slowed industry development. Early projects include Cuad- rilla's licence area in Lancashire, of which Centrica holds a 25 per cent stake, and the Dart Energy operated licence near Stirling in Scotland, which has already secured a five-year gas supply deal with SSE Energy. "The pace of shale gas explo- ration has been painfully slow with no planning applications approved yet," said EY partner Chris Lewis. "With that in mind the announcement of a sovereign wealth fund in the North with a focus on shale gas is a welcome move that should increase sup- port locally, as well as ensure that communities benefit from skills and jobs," he added. Gas EAC to probe impact of fracking on water The Environmental Audit Com- mittee (EAC) has launched an inquiry into the impact of frack- ing on water quality. The parliamentary select committee, chaired by Labour's Joan Walley, has invited written evidence on what risks the pro- cess of hydraulic fracking – used to extract shale gas – poses to water supplies and quality. The EAC also wants the inquiry to address what safe- guards are needed to limit the risks to the environment, as well as the implications fracking will have on carbon emissions. Environment secretary Liz Truss told the Environment, Food, and Rural Affairs Select Committee in September that the permitting regime will protect the UK's water from any pollu- tion from fracking. She told MPs there are a range of government depart- ments "making sure this is done properly", including the Environment Agency, the health and safety executive, and the Department of Energy and Cli- mate Change. Written submissions on the EAC's new inquiry into fracking should be made by 31 December. ECJ: will hear claim of discrimination