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Utility Week 5th June 2015

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UTILITY WEEK | 5TH - 11TH JUNE 2015 | 11 Policy & Regulation This week Onshore wind to lose subsidy in RO reform Government subsidy 'no longer appropriate' in light of falling technology costs within the sector The Conservative government is poised to announce a reform of the Renewables Obligation (RO) in order to cut support for new onshore wind turbines, prompt- ing a strong industry backlash. The Tories' pre-election mani- festo promised to halt the spread of new onshore wind turbines, and a Department of Energy and Climate Change (Decc) spokesman told the Telegraph this week that both the RO and the feed-in tariff (FIT) regimes would be reformed because a government subsidy is "no longer appropriate" in light of falling technology costs. The cut could derail plans for 7GW of unconsented capacity, but Government says there is "enough". The UK already has 9.5GW of wind capacity installed and a fur- ther 5.2GW has planning consent, which should meet the government's aim of securing 11-13GW of wind capacity by 2020, even if not all consented windfarms move forward. "Looking at what has already had planning permis- sion, there is enough onshore wind to contribute what's needed to reach the ambition set out in the coalition government's renewables roadmap that 30 per cent of our electricity should come from renewables by 2020," the Decc spokesman told the Telegraph. Committed wind power developer Scottish Power's chief corporate officer Keith Anderson told the Telegraph the plans will "hugely damage" investor confidence: "Onshore wind is clearly still the most cost-effective large-scale way of deploying renewable technology in the UK. Economically, you would therefore question, why would you want to bring that to a premature halt?" JA GAS Energy Bill to drive security of supply The government's legislative plan for the next five years will include an Energy Bill designed to strengthen security of gas supply by bolstering the role of the Oil and Gas Authority (OGA), according to the Queen's Speech. The Bill will include measures to devolve regulatory powers to the OGA so it can become a "robust, independent and effec- tive regulator" capable of max- imising the economic recovery of the UK's dwindling reserves. A parliamentary statement said the Bill will formally estab- lish the OGA as an independent regulator, with powers over the industry to be devolved from the secretary of state to the new regulator. This approach should increase industry collaboration, drive down costs for consumers and help prolong the life of the UK's continental shelf reserve. GAS Preesall decision to fall to Lord Bourne The decision on whether to move ahead with the Preesall gas storage project in Lancashire will now fall to Lord Bourne, fol- lowing mounting concerns over an assumed conflict of interest involving the energy secretary. Amber Rudd is the sister of Roland Rudd, whose PR firm has lobbied government to back the development of the 900 mil- lion cubic metre project, which stalled following concerns over its geological impact. But the Department of Energy and Cli- mate Change (Decc) has denied any conflict, saying the secretary of state was never in a position to approve or refuse the project. Uncertainty over which Decc member would make the decision was quashed by the department's Twitter feed, with confirmation that the decision will be Bourne's. ENERGY Regulator to replace controversial SMI Ofgem will scrap the current tool it uses to monitor the level of profits energy companies make from their supply business, aer criticism from the industry. The regulator's Supply Market Indicator (SMI) aimed to provide a 12-month forward view of cost trends using the average annual consumer bill and estimates of the annual cost per customer to the supplier, including whole- sale commodity and policy costs. The SMI was oen used by the press as a barometer for the profits being made by compa- nies, despite the fact it was not based on their financial results. Ofgem said this summer it "will announce a new range of wholesale and retail market indicators which we will be pub- lishing on a regular basis". The UK already has 9.5GW of capacity installed Political Agenda Mathew Beech "Government is looking to tackle the energy trilemma" In the first all-Conservative prepared Queen's Speech for 19 years, the new government unveiled its grand plans for the coming parliament – with some echoes from 1996. The John Major-led govern- ment proposed plans to support a "flexible" European Union, for construction to start on HS1, and for terrorism to be tackled. David Cameron's first solo Queen's Speech saw pledges for a European Union in/out refer- endum (aer he has renegotiated to squeeze as much as possible from the North Sea reserves. Affordability is another chal- lenge Rudd will have to meet. The third leg of the trilemma – not to be forgotten despite Tory opposition to onshore wind – will be dealt with by shiing responsibility for granting con- sent to turbines to local councils. It may have been a Queen's Speech of deja vu, but the gov- ernment is looking to tackle the energy trilemma, and it will have no one else to blame if it fails. Britain's relationship); to press ahead with legislation to allow HS2 to be developed; and for extremist behaviour and propa- ganda to be clamped down on. One thing in the 2015 version that was missing in 1996 was the pledge for another Energy Bill – less than two years since the last one received Royal Assent. New energy secretary Amber Rudd will be tasked with guiding the bill through parliament, and ensuring measures to increase energy security. The Oil and Gas Authority will be nurtured into a fully functioning regulator with the intention to strengthen security of gas supplies for the UK and

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