Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
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UtILItY WeeK | 23rd - 30th September 2016 | 11 Policy & Regulation "It is absolutely vital that the UK government honours its earlier commitment to provide a ring-fenced allocation for marine energy in its renewables support scheme. They must tackle the current uncertainty that exists before they cause irreparable damage to the long- term prospects for the sector." Nicola Sturgeon, Scottish fi rst minister and SNP leader "The important point is that we have taken energy and climate change and put them alongside business and industrial strategy – and I think that by doing so we will get a better, more strategic approach on these issues." Theresa May, PM and Conservative leader "We are very sceptical about competition in the water industry, which actually goes against the trend in much of the rest of Europe, which is of re-municipalising water and giving it back to communities. A government committed to devolution might consider that, but this government wants competition." Jeremy Corbyn, Labour leader government wants Areas to address: Behind the ongoing EU exit negotia- tions and debate, there are a num- ber of areas the various parties will want, and need, to address at their party conferences. These not only relate to Brexit, but also the ongo- ing development and operation of the energy and water sectors. Here are some of the key areas Utility Week expects the conferences to address: Environmental regulations The majority of the UK's environ- mental and water quality regula- tions are created at a European level. The Drinking Water Directive, Bathing Water Directive and other environmental legislation are moni- tored, regulated, and punished, by the EU. The negotiations by David Davis's Department for Exiting the European Union, over the course of the next few months and years, will have to address what UK standards will be, and where the responsibil- ity for creating them will fall – the Department for Environment, Food and Rural Aff airs or the Environ- ment Agency are the likely destina- tions. In the short term, nothing is likely to change but having that longer term certainty, on which the water and energy companies can invest and maintain their assets, is crucial. Carbon targets Once the initial hysteria surround- ing the fact the "climate change" part of the name was not being transferred to the new Department for Business, Energy, and Industrial Strategy (BEIS) had died away, thoughts turned to the UK's role in the EU meeting its climate change targets. Energy and business secretary Greg Clark has said the UK will ratify the Paris climate agreement drawn up at the end of last year, but there remains some uncertainty as to whether the UK will stick to its climate change plans. The Climate Change Act ensures the 2050 target remains in law, but further encouraging sounds and policies from all the parties would form a positive discussion, and one to reassure green developers. EU and single energy market The fi nal major Brexit policy area the energy companies will be con- cerned about is the UK's ongoing relationship with the EU and the single energy market. The European Commission has been aiming for integration of European member states, allowing electricity to flow across borders to the regions of highest demand. This in turn will help to off set the variability in renewable generation and the mismatch between supply and demand across the EU. With the UK looking to build more interconnectors, tapping into the greater European electric- ity market, how Britain interacts with its EU neighbours is vitally important. Water competition Away from Brexit, the non-domestic water market is about to enter shadow operation, ahead of the full go-live in April next year. Alongside this, the government has stated that the domestic market is likely to be opened by 2020. With an Ofwat review stating that a typical household would save only £6 a year, views on how – and whether – the domestic sector should be opened up to competi- tion will surface. Nuclear For new nuclear, most people read Hinkley Point C. The much-delayed project is back on the agenda since new prime minister Theresa May approved the deal last week. Within Labour there are divi- sions over support for new nuclear, and the SNP is opposed. With a need for signifi cant low carbon baseload generation, the debates will surround whether the new projects are required, and what represents a good deal if they are deemed necessary. Consumer protection The Competition and Markets Authority set out its plans to protect energy customers earlier in the year and the government has pledged to implement them in full. But opponents argue that this does not go enough to protect consumers, many of whom are still on the most expensive standard variable or prepayment tariff s. Solutions could involve greater state intervention, stricter regula- tion, or a reliance on market forces to come up with the best result. The options are bound to be discussed by MPs and delegates.