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UTILITY WEEK | 7TH - 13TH APRIL 2017 | 15 Policy & Regulation This week Treasury: we did not force Decc to axe CCS Official says ex-energy department "understood need" to rein in spending after LCF budget bust The Treasury has denied forcing the now-defunct Department of Energy and Climate Change (Decc) to axe a competition for carbon capture and storage (CCS) pilot projects in late 2015. Presenting evidence at a one-off session for the House of Commons' Public Accounts Committee's investigation into the future of CCS, a senior Treasury official rejected sug- gestions by former Decc shadow secretary Caroline Flint that 11 Downing Street was "driving" energy policy. Neil Kenward, deputy director for energy, environment and agriculture at HM Treasury, said the department had "not imposed" the CCS axe, adding that Decc had "understood the need" to rein in spending on low-carbon technologies aer the Levy Control Framework had gone over budget due to greater than anticipated demand for projects. He said the withdrawal of £1 billion worth of cap- ital funding by the government had taken place as part of a wider review of spending. "Within that context, CCS had to compete against alternative projects: £1 billion spent on CCS would be £1 billion less on schools or hospitals." Pressed by the committee on the impact of its decision to cancel the competition at the 11th hour, Kenward said the government "understood that withdrawal of funding would affect confidence of investors in that area". Alex Chisholm, permanent secretary at the Depart- ment for Business, Energy and Industrial Strategy (BEIS), said the government continued to see a role for CCS, which would feature in the emissions reduction plan the government expected to publish "this year". DB ELECTRICITY Second CfD auction opens to bidders The second contracts for dif- ference (CfD) auction launched on 3 April, with £290 million of deals available for various renewable energy projects. Potential bidders have until 21 April to submit their applications for funding, with final decisions and clearing prices expected to be announced in the autumn. The two delivery years for this round are 2021/22 and 2022/23 and the eligible areas include offshore wind, anaerobic digestion, wave and geothermal. According to the government, the contracts offered in this round will "support a key pillar of the industrial strategy". "This auction underlines that Britain is open for business to companies seeking to invest in low-carbon energy," said energy minister Jesse Norman. The government is expected to hold two more CfD rounds before the end of this parliament. WATER Ofwat to go ahead with broker code Ofwat will proceed with plans to implement a non-binding code of conduct for third-party intermediaries (TPIs) in the open water market. In its decision document pub- lished on 31 March, the regulator said: "At this point, and given our current powers, we believe that the [customer protection code of practice] together with us issuing our TPI code princi- ples through non-binding guid- ance is the most effective and proportionate approach." However, the regulator will engage with the UK government to become a designated enforce- ment authority for businesses' "protection from misleading marketing regulations". ELECTRICITY Networks 'shouldn't own storage assets' Networks should not be allowed to own storage assets as doing so would lead to market distor- tions and inefficiencies, a former Npower boss has warned. Services for the grid should continue to be bought through competitive tenders, said North Star Solar chief executive Paul Massara. "It's far better if regulated assets and regulated parties – the DNOs and National Grid – go out to tender, because then somebody can provide a range of services with that asset and therefore it's going to lower the marginal cost and create a level playing field," he said. Massara was responding to reports in the FT that, in their submissions to a government consultation, National Grid and UK Power Networks requested a rule change to enable them to own and operate storage assets. White Rose: funding cut kept it on drawing board Political Agenda David Blackman "It is hard for the government to plot a way forward" It was end of term at Westminster last week. Much of Parliament's time over the past three months has understandably been taken up with the legislation that enables the UK to leave the EU. According to a recent report by the Institute for Government, Whitehall departments have been told to prepare for Brexit while still pressing ahead with 2015 election manifesto commitments. On top of that, ministries are continuing to hack back on headcount to save money. Alex Chisholm, permanent secretary at the department, stated he wouldn't like to "hazard a guess" about when it would appear. His statement was in line with ministers' repeated commitments to publish the ERP "as soon as possible" this year. And given the wider shake-up of the UK's emissions reduction regime, which will be triggered by Brexit, it is hard for the gov- ernment to plot a way forward. But investors need a bit more certainty from Whitehall. Something has to give is the message from the Institute, essentially a think-tank for civil servants. It urges the govern- ment to sort out its priorities by giving departments a clear steer. The report also calls for the rein- ing in of budget cuts for those departments that will be under particular pressure from Brexit. Prioritisation is already hap- pening de facto in many areas of energy policy. Further evidence of this emerged last week. The lead civil servant at BEIS refused to be pinned down by the House of Commons Public Accounts Committee on whether the emis- sions reduction plan (ERP) would be published by the summer.