Utility Week

UTILITY Week 29th January 2016

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8 | 29TH JANUARY - 4TH FEBRUARY 2016 | UTILITY WEEK Interview Treasury ideology, could have broader reper- cussions. "It's an erratic government and they have done this because they want to balance the books today. The knock-on effect is that investors are becoming nervous, which makes any borrowed money more expensive. "This is a huge mistake," he sums up, and one which is of a piece with the overall impression that "there is not a plan" behind govern- ment's action on energy and climate change. A possible exception is the capacity mechanism. But even here, where MacNeil says it was clear what the gov- ernment was seeking to achieve, the mechanism itself has led to "perverse effects" that are far removed from the intended outcomes. "They set up a mechanism in the middle which mangles it all and spins out, not in the direction you want to go, but with all sorts of funny things with diesels appearing all over the place." Without breaking his stride, MacNeil moves onto the subsidy and support regimes for renewable technologies to shi the UK's electricity-generating carbon intensity down from its current level of 450g CO 2 /kWh to the 100g required to meet the 2030 climate change targets. Solar and onshore wind have borne the brunt of many of the government's subsidy cuts, but MacNeil – while suggesting this is an area for the National Audit Office (NAO) to investigate – believes that, even with the subsi- dies in place, renewable technologies could bring down electricity costs. This puts him at loggerheads with the government, which stated that pulling the subsidies for these technologies was done with consumers in mind and to remove the cost of the levies from their bills. The ECCC chair says once the renewables have been installed, the cost of generation is "almost nothing" and the generation companies are "dumping it – and they are dumping it – on the wholesale market, which is further lowering the price". He surmises that without the levies and therefore the renewable generation in place, "there is an argument consumers would be paying more because the wholesale price wouldn't be so low". "What is not clear is would the price be greater, less or the same, and that is a job for the NAO to determine," he adds. Pausing to answer his office phone, which interrupts as a reminder of how in demand the SNP MP is, Mac- Neil relays to Utility Week a solution that was suggested to him by Philipp Grunewald, research fellow at Oxford University's Environmental Change Institute, of the need for a "system thinker". "I think that is a very good idea," he says. "I just hope the ideology of the market knowing everything won't be something that blocks it, because the market clearly doesn't know everything." MacNeil says having an overarching system thinker – or a system architect – would help to avoid the short- termism he sees as having recently blighted government policy, reassure and encourage investors, and help to develop a more coherent energy system that is able to integrate new technologies effectively. "There is not a free market in energy; it is a series of stimuli issued from government designed to push and pull various levers, so a system thinker is needed to understand what's going on, how various bits interact, and the effect one domino falling has on surrounding dominoes – or even ones far away." He cites storage as an example. Currently, energy stor- age solutions are hit with a double whammy of costs – once for taking electricity from the grid and then again for exporting back into the system. This, MacNeil highlights, is something of a "his- torical accident" and one that could be resolved with a system thinker in place. "We have to make sure technology isn't hobbled by government and regulators who can't keep up with what technology can do," he says. On the technology front, MacNeil touches on the impending smart meter rollout and states prepayment customers should not have to pay a premium aer the rollout. He then jumps onto the wider topic of customer interaction and engagement with the energy market and the small matter of the CMA inquiry. MacNeil is hopeful that the CMA's remedies – the publication of which was pushed back days aer Util- ity Week sat down with the ECCC chair – will lead to changes in the sector and in attitudes to switching. The most important element, he says, is ensuring that con- sumers are aware of when a tariff is not value for money and to stimulate them to find a better deal. "They need to do something serious about switching that is helpful to people – whether it's compulsory switching or making sure people go onto a tariff that's not a rip-off." He suggests that renaming standard variable tariffs to identify them as the most expensive options would be an easy place to start. "It's giving a title so people know what this means. It's standard nothing. It's expensive, always. Something as light as that, merely a title change, may stimulate people to think they're paying too much." MacNeil is not one of the millions who needs encour- aging to switch. He recently moved away from a big six supplier and even helped an elderly neighbour make the move. These actions are born of a naturally questioning nature, rather than a desire to make a statement on tak- ing up the ECCC role, he says. Realising suddenly how long it has been since that appointment took place, MacNeil exclaims: "God, doesn't time fly!" before thanking his predecessor Yeo for discussing "bits and pieces" on the job and the sector. He also acknowledges the "fantastically knowledgeable" Lord Deben for doing the same. MacNeil is still learning in the role and adjusting to the changes it has brought to his political life – includ- ing an unusually lively Christmas party season. "It's been transformative," he says. "Previously there were very few people who would want to talk, but this time there are a lot of people who now want to talk." Those conversations are leading to ever-increasing opportunities to "firefight" for wide-ranging causes, from farmers with wind turbines in Derbyshire to "someone trying to get a connection in Somerset, or for customers in rural Wales". "I've probably never been busier," MacNeil rounds off. And with that, his office phone rings once again, summoning him to his next meeting. "We have to make sure technology isn't hobbled by government and regulators who can't keep up with what technology can do" Current ECCC inquiries • Outcomes of Paris COP21, announced 11 December 2015 • Setting the fi h carbon budget, announced 2 December 2015 • Pre-legislative scrutiny of the government's dra legislation on energy, announced 21 January 2016 • Future of carbon capture and storage in the UK, announced 14 January 2016 • Investor confidence in the UK energy sector, announced 16 September 2015 • ECC priorities for holding government to account, announced 16 July 2015 • Low carbon network infrastructure, announced 17 September 2015 • Home energy efficiency and demand reduction, announced 16 September 2015

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