Utility Week

6 | 25TH - 31ST MAY 2018 | UTILITY WEEK Policy & Regulation This week New CfD rules to cost consumers £1.5bn Watchdog warns consumers face expensive bill following changes to rules for awarding contracts E lectricity consumers will be out of pocket by £1.5 bil- lion due to a change in the rules for the latest contracts for difference (CfD) auction, parlia- ment's spending watchdog has concluded. The National Audit Office (NAO) has published the results of an investigation into the 2017 CfD auction following the changes to the low carbon electricity scheme by the Department for Business, Energy and Industrial Strategy. Offshore wind projects, which were able to submit lower than expected "strike price" bids because of efficiency and technological improvements, benefited from the new rules, which initially award contracts to the lowest bidders. Three offshore windfarm projects, generating a total of 3.2GW, swallowed up all but a small proportion of the 3.3GW of capacity awarded contracts in last September's auction. Projects were then rejected if they exceeded the cap on capacity. This meant that eight small-scale pro- jects, which were more expensive per unit of electricity generated, won out at the expense of larger and cheaper schemes, said the NAO report. The impact was exacerbated by rules designed before officials understood the dramatic fall taking place in offshore wind prices, that "pulled up" the price per unit lower bidders received to those procured by their more expensive counterparts. The NAO claims the rule change means electricity consumers will pay some £100 million extra a year – a total of around £1.5 billion over the 15-year life of the CfD contracts. DB ENERGY SSE-Npower merger provisional decision due in mid-August The Competition and Markets Authority (CMA) has released a timetable for the second phase of its investigation into the planned merger between Inno- gy's Npower and the retail arm of SSE. A provisional decision will be revealed in mid-August. The CMA will spend the next few months gathering and veri- fying information. Hearings for the main parties involved in the merger will be held in mid-July. Following its initial ruling, the CMA will hold response hear- ings, if required, in September. The competition watchdog will release its final report in mid-October. It has until 22 Octo- ber to make a final decision. ENERGY Smart meter action plan to be published The government has pledged to publish by the end of this year an action plan outlining how it intends to overcome the opera- tional and technical difficulties holding back delivery of its smart meter programme. During a House of Lords debate on the Smart Meter Bill last week, junior Business, Energy and Industrial Strategy minister Lord Henley said a "for- ward plan of activity" would be included in the annual progress report on the rollout. The programme has been criticised for being too far behind schedule to meet the government's target that suppli- ers should offer all households a smart meter by the end of 2020. Lord Henley said: "This will show the government has a clear plan for resolving the remaining technical and operational chal- lenges." PAN-UTILITY Green watchdog is like a 'watchpoodle' The government's plans for a new environment protection regime were rejected by the House of Lords last week. During the final debate on the EU Withdrawal Bill, peers voted for a stronger environmen- tal protection framework than that outlined in the Department for Environment, Food and Rural Affairs' consultation paper. The green watchdog proposed in the paper will not have legal powers, so instead of taking bodies that flout environmental standards to court, it will be able only to serve "advisory notices". Baroness Young of Old Scone, former Environment Agency CEO, said: "The watchdog is more like a watchpoodle and simply will not do the task that has been carried out by the Com- mission and the European Court of Justice very successfully." Offshore wind: benefited from the new rules Political Agenda David Blackman "The new agency will have no powers to go to court" The tweet by Claire Perry, minis- ter of state at the Department for Business, Energy and Industrial Strategy, proclaiming fracked gas as a "low carbon" source of fuel, hasn't helped the Conservatives' efforts to detoxify their party's brand on environmental issues. However, it has compounded suspicions that the Tories' born- again enthusiasm for the envi- ronment is "greenwash". These have been stoked by two policy announcements. The most recent, which sparked Perry's their environmental duties. For- mer Environment Agency chief executive Baroness Young has branded it a "watchpoodle". Nobody who has seen Perry speak will doubt that she feels strongly about the decarbonising agenda. She has spent a lot of time in the past year making the case that the Tories are serious about protecting the environ- ment. From now on, though, observers will be increasingly focusing on policy substance rather than ministerial rhetoric. tweet, is last week's proposal that fracking should be subject to the planning regime nor- mally used to determine house extensions. Under this, fracking applications would be treated as "permitted development" and wouldn't have to go through the full-blown planning process. The fracking proposal emerged a week aer the govern- ment published a consultation paper outlining plans for envi- ronmental protection in the post- Brexit era. It has been panned in green circles because, unlike the European Commission, the new agency is not being given powers to take the government and its agencies to court if they fail in

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