Utility Week

UTILITY Week 6th May 2016

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

Issue link: https://fhpublishing.uberflip.com/i/674989

Contents of this Issue


Page 11 of 31

I t has been one year since the House of Commons turned blue and the Conserva- tives won a slim majority in the 2015 gen- eral election. Since then, the Tories have put in the foundations to allow their manifesto pledges to be rolled out – and now they are free of the restraining influence of the Lib- eral Democrats. Cutting costs and lowering bills for con- sumers have been the main drivers behind the austerity-focused gov- ernment. This has seen the renewables sector hard hit, with support for onshore wind, solar and biomass cut completely or hugely reduced, while carbon cap- ture and storage (CCS) has been another victim. The water sector has also felt the Tory force, with a plan to extend competition to the household water retail market by 2020. All these changes haves not gone unno- ticed in the investor community, with all of them creating uncertainty – something investors do not like. The biggest uncertainty factor so far has been the referendum of the UK's membership of the EU (see box). Freed from the coalition, the Conserva- tives are now "rolling back the policies that the Lib Dems championed in government with unseemly haste", according to new Lib Dem leader Tim Farron. Just over a month aer the election, the Renewables Obligation for onshore wind was cut back by a year, with energy secretary Amber Rudd saying it will "keep bills as low as possible for hard-working families". Sup- port for solar and biomass was also scaled back as the Tories sought to gain control of 12 | 6TH - 12TH MAY 2015 | UTILITY WEEK Lobby Election / Party conferences The Conservatives one year on Mathew Beech assesses what the utility world looks like after one year of Tory government. Policy & Regulation The utilities bank? Corbyn's proposal for a national investment bank (NIB) to help utili- ties meet their massive infrastructure bills sounds attractive. But is it? The NIB would be partly funded by cutting corporate reliefs and the levy control framework, which was £1.7 billion over budget. This move was abiding by the mantra set out by chancellor George Osborne that "going green shouldn't cost the earth". This was also demonstrated when the £1 billion carbon capture and storage competition funding was scrapped. Further savings were made with the aban- donment of the Green Deal, and the prom- ise of a new plan on energy efficiency that would either be "more efficient" or much reduced, depending on your political viewpoint. Shadow energy minister Alan Whitehead has warned that a more ambitious pro- gramme is needed rather than a short-term focus on saving costs. These changes have formed a "jerky evolution" of energy policy, according to Whitman Howard analyst Angelos Anastsiou, and these "jerks" have hit investor confidence in energy policy. The UK has plummeted from 4th to 11th in the EY renewables investor attractiveness index, and EY energy corporate finance The Brexit referendum The 23 June referendum has brought with it significant uncertainty despite its being a manifesto commitment Energy secretary Amber Rudd has come out strongly in favour of remaining in the European Union, saying leaving it could cost the energy sector £500 million a year and would give the country a "massive electric shock". Her Decc colleague and energy minister Andrea Leadsom has accused In campaign- ers of "scaremongering", and highlighted the massive internal divisions within the country's ruling party. If the UK electorate does vote in favour of Brexit, utilities will be plunged into an uncer- tain world –and one that will have a huge impact on investor confidence and policy. See analysis, 18 18 June – Energy secretary Amber Rudd an- nounced onshore wind RO to end a year early 5 October – Osborne unveils plans for the NIC Timeline 7 May – polling day 9 September – Government axes pre-accreditation for projects applying for support through the FiT scheme 23 July – Decc scraps Green Deal funding leader Ben Warren warned that by prema- turely withdrawing support, the government risks "stalling or killing projects". In water, the Treasury has asked Ofwat to conduct a cost-benefit review on the impact of the domestic competition by the end of this parliament – and the regulator is due to report back in the summer. However, with the government eager to pursue competition, it appears a done deal. A year on from the Commons turning blue, the Conservatives have stuck to their agenda on competition and austerity. They have reset energy and cut back on policies developed in conjunction with the Lib Dems, establishing a platform for blue policies to be rolled out over the next four years. Election result (seats) Conservative: 330 (+28) Labour: 232 (-24) Others: 24 Lid Dems: 8 (-49) SNP: 56 (+50) MAY JUN JUL AUG SEP OCT NOV 18 November – Rudd's policy "reset" speech; confirms coal closures by 2025

Articles in this issue

Archives of this issue

view archives of Utility Week - UTILITY Week 6th May 2016