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 12 of 31

UTILITY WEEK | 6TH - 12TH MAY 2015 | 13 Policy & Regulation "Public support for renewable energy at its highest level since 2013 at 81 per cent. The Tories' attack on green energy is wrong and unpopular." Former energy secretary Ed Davey "Can this Government deliver an energy policy?" I t has been an unnerving year for the energy sector under the first Conserva- tive government in nearly 20 years. Aer five years of compromise with the Lib Dems from the implementation and demise of the Green Deal and despite cross-party support for the passage of the Energy Act 2013, energy policy and delivery uncertainty seemingly continues. The wind has been taken out of the onshore wind sector's sails with early closure of finan- cial support and changes to the planning regime. However, while this policy was in the Conservative manifesto, just as with solar subsidies it was an emergency stop rather than a managed approach. This put many companies out of business and le investors and developers in other areas of the sector wondering if they would be next. The Paris Deal was lauded as a success around the world and one of the early supporters was the UK government. However, in the era of cheaper oil and gas, its unintended consequence on the Levy Control Frame- work (LCF) going over budget unnerved the Treasury and angered many Conservative MPs who are less than supportive of the case for renewables. So energy secretary Amber Rudd "reset" the UK's energy policy with gas and nuclear being the winners and coal to close by 2025. Shadow energy minister Alan Whitehead also warned last October that the UK needs 20GW of new gas but there are a dozen plants with planning permis- sion still without investment mechanisms to support their construction forthcoming. So given this cross-party support and planning permissions in place, you would think for the second auction of the capacity mechanism, whose founding principle was the delivery of new-build gas, would ensure it delivered just that. Yet it deliv- ered another set of embedded diesel generation. But the gov- ernment claimed victory for the consumer because this capacity was obtained at a "good" price. But many in the investment and development communities asked. at what cost? And then we come to nuclear. The current energy mix predications are that the UK requires around six new nuclear power stations. But the first, a £28 billion plant at Hinkley, has been delayed yet again until this autumn with the EDF chief being summoned to parliament to explain it. Should a power station cost £28 billion when a gas power station would cost a fraction of that and could be built in three years? This deal seemingly is more of a political decision then what a market can deliver. So one year into this current administration and we are still le wondering just what the government's energy policy is and can it actually keep the lights on in a low-carbon future? Mike Harrison, Principal Consultant – JBP Energy Opinion Mike Harrison, Principal consultant, JBP Energy Utility Week Lobby produced in partnership with: The Conservative government was formed just over a month aer AMP6 began for the water compa- nies, a process that represented a significant shi from previous price controls with Ofwat's shi to totex and to output-based regulation. With work well underway for the competitive market for non- household customers to open in April 2017, the sector would have been looking to fly under the political radar. However, at the end of November, the Treasury unveiled a master plan to increase compe- tition across a number of sectors – including in water. The Treasury asked Ofwat to conduct a cost-benefit analysis of introducing household competi- tion by the end of this parliament in 2020. The initial reaction was largely positive, with Ofwat chief execu- tive Cathryn Ross saying it could result in more customer engage- ment, lower prices, better service and encourage water efficiency. MOSL chief executive Ben Jeffs, the man tasked with ensuring the non-domestic market opens on time, also "welcomed the clarity of thinking" from the government. The move had been expected by the industry over the medium to long term, and concerns were raised about the timescale. Johanna Dow, Business Stream chief executive, said she thought it best to wait for any issues with the non-domestic market to be ironed out first. Ofwat is due to complete its report in the summer, but the Conservatives seem keen to pursue their pro-market agenda, saying "following this, the government will work with water companies to begin the transition to household retail competition". With the competitive agenda going into overdrive, the sector is still waiting for Defra to begin the process of abstraction reform, which is expected later in this parliament. With the only concrete devel- opment being the Treasury's call on Ofwat to review the impact of domestic competition, Whitman Howard analyst Angelos Anasta- siou tells Utility Week the sector has had little choice but to "just carry on as before". Household competition in water is go- ing to be pushed through before non- domestic competition has proved itself. 25 November – Decc scraps £1bn CCS competition 30 November – HMT unveils plans to intro- duce domestic water competition by 2020 14 December – UN member states agree binding global climate change deal 16 March 2016 – The Budget: E-Serve to be split from Ofgem, £50m boost for DSR and storage, CRC cut and CCL raised DEC JAN FEB MAR APR Creating waves in water

Articles in this issue

Archives of this issue

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