Utility Week

UTILITY Week 28th April 2017

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10 | 28TH APRIL - 4TH MAY 2017 | UTILITY WEEK Policy & Regulation Lobby Policy / Budget / Brexit Policy & Regulation The X factor The country is going to the polls three years early as Theresa May seeks a direct mandate from the people, but is the election good or bad news for utilities? T here was an end of term buzz in Par- liament last week as it prepared to break up. Greg Clark, the business and energy secretary, got in the mood by dispens- ing warm wishes to Iain Wright, the Labour chair of the department for Business, Energy and Industrial Strategy (BEIS) select commit- tee, following the latter's announcement that he is stepping down as an MP at the upcom- ing snap election (see interview, p6). Clark could probably afford to be mag- nanimous. With the Tories around 20 per cent ahead in the polls, the main question exercising pundits is how big the Conserva- tive majority will be rather than whether the current government will win a fresh term. The bad news for utilities – most notably in the energy sector – is that the election means fresh delays in areas that are already bedevilled by hold-ups. The so-called purdah period, during which government departments are pre- vented from making announcements, has already kicked in. By the time Parliament reconvenes aer 8 June, the summer recess will be just over a month away (see timeline). Once time is factored in for appoint- ing new ministers and bringing them up to speed, the hiatus in decision-making could easily extend until the end of the party con- ference season in October. Clark has earned good reviews during his spell heading BEIS, so could easily be in line for a promotion by May who is understood to trust him – some even think he might offer an alternative to Hammond as chancellor. He sits on more Cabinet committees than any other minister, and Hammond damaged his standing with May with his self-employed tax rise boob in the Spring Budget. Whoever heads the Treasury, they will need to deliver a decision on the future of the carbon price floor, which has been kicked into touch during the past two Budg- ets. The need for this is pressing. The next round of T4 auctions, which are scheduled to take place at the end of this year, will cover 2020/21, when existing arrangements will already have elapsed. "It's getting to the point that if its not clarified, generators bidding into the next carbon market won't know the price for the year they are bidding for," says Jonathan Marshall, energy analyst at the Energy and Climate Intelligence Unit. In addition, there are a ra of BEIS pol- icy areas where decisions are long overdue, including the emissions reduction plan and the government's small nuclear reactor com- petition. Then there's all the ongoing work which will get shunted backwards, most notably the smart and flexible energy systems investigation being conducted with Ofgem. The flipside to all this delay and uncer- tainty is that a big win for the Conservatives on 8 June could usher in a period of the pol- "The risk for energy investors of the forthcoming election is of further delays to key decisions that are pending." Simon Virley, head of power and utilities, KPMG "While it is frustrating that a number of key consultations have been delayed, we are movingly quickly to inform and educate where possible." Nina Skorupska, chief executive, REA "Calling an election has the potential to delay or put pressure on the development of energy policy. Any delays are frustrating." Peter Emery, chief executive, Electricity North West Timeline APRIL MAY JUNE JULY 18 April Election called by Theresa May 20 July - 5 September Summer Recess 9 June New government formed 21 April Purdah 3 May Parliament dissolves 19 April Vote on whether to call an early general election Thursday 8 June Polling day

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