Utility Week

UTILITY WEEK | 1ST - 7TH JUNE 2018 | 9 Policy & Regulation This week Whitehall rejects changes to CfD rules Senior civil servant says there are no plans to change the rules before next year's auction The government does not plan to change the rules of the Contracts for Difference (CfDs) before next year's round of the auction, a senior civil servant from the Department for Business, Energy and Industrial Strategy (BEIS) has said. Speaking at an event to launch an Energy UK paper that outlines the industry body's vision for the upcoming five- yearly review of Electricity Market Reform (EMR), Jane Walker said BEIS was due to appoint an external consult- ant to carry out a long-term evaluation of the scheme. This work, which will cover whether the auction pro- gramme has met its design objectives, whether they are still appropriate and if it provides value for money will feed into the process of reviewing the EMR. But the review would not have an impact on the third round of the CfD, which is pencilled in for next autumn, said Walker, who ran the 2016 CfD auction. "This review isn't proposing to change anything ahead of round three." Walker also said that the department had "no plans" to change the structure of the bidding process, which was identified by the National Audit Office as the cause of an estimated £1.5 billion overpayment as a result of the scheme's second round last year. The Energy UK report recommends allowing renewa- bles to participate in future rounds of the Capacity Market. It also contains a call for greater clarity on the timing and rules for future CfD auctions to help genera- tors develop supply chains and plan more effectively for future investment. DB ENERGY Scotland raises CO2 reduction targets The Scottish government has raised its carbon reduction tar- get to 90 per cent of 1990 levels by the middle of this century. The Climate Change Bill proposes that the emissions goal should be increased from the current statutory figure of 80 per cent, which is in line with the UK government's target. The dra bill also sets out an ambition by the Scottish govern- ment to achieve a 100 per cent reduction in emissions "as soon as possible". The legislation pro- poses that a date for this "net- zero" target should be legally binding, subject to the consent of the Scottish parliament, when there is evidence to demonstrate it can be achieved. WATER England 'will suffer shortages by 2050' Many parts of England will face "significant" water deficits by 2050 unless action is taken to increase supply and reduce demand, the Environment Agency has warned. In the foreword to the agency's first report on water resources, chair Emma How- ard Boyd writes: "If we do not increase water supply, reduce demand and cut down on wast- age, many areas will face sig- nificant water deficits by 2050, particularly in the South East." The impact will be more extreme if population and carbon emissions increase. Even with low population growth and modest rises in emissions, there will be "significant" water supply deficits by the 2050s, particularly in the South East. Future demand will be partially shaped by government choices on electricity supply, which, together with other indus- tries, swallows up more than a third of freshwater abstracted. ENERGY Ofgem to probe NGET's forecasts Ofgem has launched an investi- gation into National Grid Elec- tricity Transmission's (NGET) UK demand forecasting. The regulator said it will examine whether NGET breached rules relating to its duty to oper- ate the system in an "economic and efficient manner". This will include the production and pub- lishing of appropriate demand forecasts. NGET is the system operator for the electricity transmission network in England, Scotland and Wales and is owned by National Grid. "The opening of this inves- tigation does not imply that we have made any findings about non-compliance by NGET," the statement added. Market reform faces a longer-term review Political Agenda David Blackman "Lords have voted through 15 amendments to the bill" It's a quiet week at Westminster as MPs take a break for Whitsun. But when they return next week, there's little doubt about what the main event will be as we gear up for the second anni- versary of the EU referendum. The Tory chief whip is under- stood to have told his party's MPs that the EU Withdrawal Bill will be returning to the Com- mons in early to mid-June. Lords have voted through no fewer than 15 amendments to the bill, each of which the gov- prioritise when the bill returns to the Commons, top of which is staying in the EU customs union. However, environment secretary Michael Gove is clearly stung by criticism of the govern- ment's proposed regime, judging by the letter leaked last week to the Telegraph, which laid the blame at the door of the Treas- ury and BEIS for watering down environmental protections. As the end game approaches for the bill, this week looks like the calm before the storm. ernment will be keen to reverse. They include the peers' parting shot to reject the government's plans for a new environment protection regime. As the elected chamber, the House of Commons holds sway over the upper house. And while there is likely to be widespread parliamentary support for the Lords' move to maintain EU environmental safeguards, the amendment may not survive the political bunfight about to break out over the bill. Labour's Brexit spokesman Keir Starmer didn't mention the environmental protection clause when he outlined the amend- ments the opposition would

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