Utility Week

UTILITY Week 20 05 16

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UTILITY WEEK | 20TH - 26TH MAY 2016 | 13 Policy & Regulation This week National Grid singled out for Ofgem MPR Mid-period review for National Grid Electricity Transmission and National Grid Gas Transmission Ofgem has launched a mid- period review (MPR) into price controls for National Grid Electricity Transmission and National Grid Gas Transmission to review three specific outputs. The MPR will look at whether there have been any changes to outputs relating to National Grid Gas Transmission's Avonmouth pipeline, the number of generation connections National Grid Electricity Transmission has had to undertake, and the increase in National Grid's system operator role. Ofgem will not be opening a review for the electric- ity transmission price controls for SP Transmission and Scottish Hydro Electric Transmission, or into gas distribution as it has not identified any issues that justify an MPR. Ofgem will consult on proposals for any changes to outputs and associated revenues in the summer, before making a decision in late autumn 2016 for implementa- tion from 1 April 2017. The energy industry was divided over the need for an MPR, with British Gas and Citizens Advice calling for one in electricity and gas transmission, and gas distribu- tion, while network companies were concerned an MPR would effectively create two shorter four-year control periods. Ofgem said it will be inviting views on how the RIIO price control framework is working when it consults on MPR proposals in the summer "to make sure it delivers for consumers in the current controls and make sure we learn any lessons for the next round of price controls". LD ELECTRICITY Decc plans contracts for difference tweak Projects looking to secure a con- tract for difference (CfD) could be forced to pay back any other state aid they have received prior to receipt of the subsidy, under a proposed overhaul of the scheme by the Department of Energy and Climate Change (Decc). They would then be barred from receiving additional state aid for the duration of the contract. Those that had received state aid would have their CfD pay- ments suspended until it was returned. Subsidies unable to be returned would be docked from future CfD payments. The change is being proposed to ensure the scheme is compli- ant with EU state aid rules – it was approved by the European Commission on the basis that the projects benefiting would not receive any other state aid. Developers are already blocked from securing CfDs if they are receiving support via the Renewables Obligation, the feed- in tariff or the capacity market. Decc has launched a consul- tation on the proposed overhaul, which closes on 8 June. WATER Government to cut public sector bill The government expects its water bill to fall by 30 per cent a year, having awarded a new public sector water licence to AquaFund, a scheme administered by utility management specialist ADSM. The multimillion pound AquaFund grant has five key objectives: reduce current UK water consumption by 250 million tonnes a year; provide funding for a range of managed services; pro- vide funding for the installation of state-of-the-art water saving equipment; deliver sustainable water supplies; and take 170,000 people out of water poverty in the world's poorest countries. It pays for all the equipment and managed services necessary to deliver substantial water and cost savings over five years. ELECTRICITY MPs back Swansea Bay tidal lagoon New research commissioned by the developers of the Swansea Bay tidal lagoon project has revealed significant backing of the project from Conservative MPs and councillors, despite the prime minister's concerns about its cost earlier this year. The survey, conducted by ComRes, showed that 84 per cent of Conservative councillors and 83 per cent of Conservative MPs support the project, which is the first of its kind. In addition, 72 per cent of Conservative MPs said the impact on the energy consumer would be relatively small and manageable. Avonmouth: pipeline outputs to be looked at Political Agenda Mathew Beech The game of political ping- pong between the Commons and the Lords is now over. And the winners are those on the green benches, with MPs finally grinding down the resolve of peers and ensuring the new Energy Act 2016 includes the provision for the early closure of the Renewables Obligation to onshore wind projects. This has been expected by the industry since the day that the Conservatives – who lest we forget promised in their predicted range for 2020. Countering that is the view that the government's "ideo- logical opposition" to onshore wind is threatening the cheapest renewable technology, and harming investor confidence. The EY index – in which the UK is now 13th – supports that view. However, with royal assent now granted, one element of that political uncertainty has been removed. There is now just the small matter of the EU referendum. manifesto to "halt the spread of subsidised onshore windfarms" – won a surprise majority in the general election last year. A third attempted amend- ment to the Bill was finally voted down in the House of Lords by 204 votes to 109, clearing the path for the early axeing of sup- port for onshore wind. The Tories will likely be crowing about how the move will save "hardworking families" money on their energy bills. This could be argued to be a shrewd move. Money is still tight as the economy slowly wakes from its post-crash slumber, and the amount of approved onshore windfarms is already within the "Those on the green benches are the Energy Bill winners"

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