Utility Week

UTILITY Week 17th March 2017

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Page 15 of 31

16 | 17TH - 23RD MARCH 2017 | UTILITY WEEK Policy & Regulation Lobby Policy / Budget / Brexit Policy & Regulation Energy on back burner A safe Budget deflated hopes for energy policy certainty – at least until the autumn. Mathew Beech reports. L ast week's Budget was the latest 'last' spring Budget. It will also be the last chancellor Philip Hammond delivers to the House of Commons prior to Article 50 being triggered and the formal start of the UK's exit manoeuvres from the European Union. This significantly shaped the content of his red ministerial box. Hammond's main agenda was to ensure Britain is fit to face Brexit head-on. This involved tax reforms, tackling the skills crisis with £500 million per annum new T-Level, and pushing the UK's credentials as a technology hub. It had been hoped the Budget would be energy policy heavy, and set the framework for the sector way into and beyond the next decade. We got hints of this as Hammond stated that the Levy Control Framework would be replaced with a "new set of controls". But the details will emerge later this year – potentially in the autumn Budget. A further green glimpse into 2017's second Budget will come because the chan- cellor promised to provide more details of his target of a total carbon price. The holding pattern continued as the retail green paper – predicted to contain interventions in the retial energy market – is still in the "shortly to be published" pile. Hammond did accommodate some change within his "safe Budget", revealing tweaks to the revaluation process for busi- ness rates to make it "smoother and more frequent". However, this has angered the renewables sector, especially solar devel- opers, who said the change did not go far enough. The oil and gas sector was the beneficiary of a Budget boost as Hammond stated the government will publish a formal discussion paper "on the case for allowing transfers of tax history between buyers and sellers". Big businesses are also set to profit from the fall in corporation tax, which will fall to 17 per cent in 2020. Over the next few pages, Utility Week looks in more detail at the impact of Hammond's first Budget on utilities, and how his vision for a Brexit-proof Britain will begin to unfold. "This Budget has created new uncertainty around the Levy Control Framework. The industry was expecting an announcement regarding the future Budget levels and structure but this has been delayed and instead we face a new regime and no clarity on the proposed new 'set of controls'." James Court, head of policy and external affairs, Renewable Energy Association "A decision to create a new set of controls to replace the LCF is a welcome one – the mechanism is not working as it should do." David Cockshott, chief commercial officer, Inenco LEVY CONTROL FRAMEWORK CAPS FOR ELECTRICITY POLICIES RISE TO 2020/21 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 £ million 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 1. The department has published framework caps to 2020/21 in 2011/12 prices. 2. The department published framework caps in nominal terms at the time of the relevant spending review or spending round. It has, however, estimated that the cap in 2020/21 will be £9.8 billion in nominal terms (that is, 2020/21 prices) Source: Decc 7,600 7,000 6,450 5,600 4,900 4,300 3,300

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