Policy & regulation

Latest updates and analysis on how government and regulators' decisions will impact the sector 

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Boris Johnson has stated it will be up to his successor to make any significant decisions on further support for people struggling to pay spiralling energy bills. The outgoing prime minister, along with chancellor of the exchequer Nadhim Zahawi and business and energy secretary Kwasi Kwarteng, met with energy industry leaders at a roundtable to discuss potential solutions to the current crisis.
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The government has proposed using a dual Contracts for Difference (CfD) mechanism with separate strike prices for electricity generation and negative emissions to spur the development of bioenergy with carbon capture and storage (BECCS) power stations. The Department for Business, Energy and Industrial Strategy said this would be "familiar and effective", offering stable revenues to investors whilst also providing paybacks to consumers when power or carbon prices are high.
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The National Drought Group will meet again on Friday as the country experiences another heatwave but is yet to declare any parts of the country are in drought. Four water companies have imposed hosepipe bans following the prolonged dry weather and water efficiency messaging has been ramped up by all suppliers
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Featured

With drought expected to be officially declared in parts of England today, can the water sector turn this crisis into an opportunity to communicate the importance of water efficiency? Ruth Williams examines how the sector can build trust and share knowledge, as well as what progress companies themselves can make.
Analysis
The introduction of hosepipe bans by three water companies this week has sparked a wave of negative headlines. But is the water sector missing a golden opportunity to use the current pressures on water demand to engage with consumers about the need for long-term behaviour change?
Comment
Whoever wins the Conservative leadership race will face immediate pressure to deliver on the promise of more secure, affordable, green energy. Sue Ferns, of the Prospect union, insists that this must start with a clear delivery plan that provides certainty for investors, an expanded skills pipeline, and good green jobs.
Opinion

Latest in Policy & regulation

The government has announced plans to completely exempt heavy industries such as steel, glass and cement from green levies in a bid to curb the impact of spiralling electricity bills on such firms. Under the existing rules governing the Energy Intensive Industries Exemption Scheme, such heavy power users enjoy a discount of up to 85% on indirect costs of the Contracts for Difference, Renewables Obligation and Feed In Tariff subsidy schemes.
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As each week brings dire forecasts of what energy bills will look like come winter, a frantic discussion has gripped the sector on how to help consumers. Put simply, immediate action is required if we are to avoid a cataclysm for the poorest households. Is a social tariff, favoured by several key players, the solution? If so, what will it look like and how soon could it be implemented? Adam John asks the experts.
Analysis
Carbon capture and storage (CCS) projects backed by Cadent, Equinor and SSE were amongst 20 shortlisted on Friday (12 August) for government financial backing in the next stage of its drive to establish net zero industrial clusters. The projects selected by Department for Business, Energy and Industrial Strategy (BEIS) are all part of the East Coast and HyNet North West schemes, which were designated earlier this year as the first two industrial clusters in the UK in line to receive funding for the construction of CCS infrastructure.
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People living in poorly insulated homes face paying a nearly £2,000 premium on their energy bills when this winter’s price cap hike comes into force, new analysis shows. The warning comes as pressure grows on politicians to act soon to mitigate the worst impacts of impending energy bill hikes, with fresh speculation about expanding the scope of the windfall tax.
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Campaigners against EDF’s planned new nuclear plant at Sizewell have instigated a legal bid to overturn Kwasi Kwarteng’s decision to award the project planning permission last month. The secretary of state for business and energy granted consent to the 3.2GW scheme on 20 July, overturning the Planning Inspectorate’s recommendation that it should not receive the go ahead.
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Rishi Sunak has pledged to provide extra support for households with their energy bills if he wins the Conservative leadership contest as Cornwall Insight forecast the price cap will peak at more than £4,400 in April next year. The former chancellor of the exchequer, who is lagging behind foreign secretary Liz Truss in the two-horse race, made the commitment after Truss recently rejected “handouts” for households struggling to pay their bills.
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Ofgem has proposed a series of measures to speed up the delivery of large onshore electricity transmission upgrades needed to achieve the government’s target of deploying 50GW of offshore wind by 2030. The regulator said it is considering providing early certainty on funding, reducing number of regulatory approval gates and giving exemptions from the incoming introduction of competition to large onshore transmission projects.  
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Ofgem has delayed its planned consultation on introducing an allowance in the price cap to recover bad debt to allow it more time to consider the impact of the government’s energy bill support packages. The regulator has also outlined plans to delay its decision on the true-up process for Covid-19 until February next year after several suppliers raised concerns about the methodology used.
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Ofgem has decided to amend the price cap methodology to reflect the return of Contracts for Difference (CfD) payments to suppliers as a result of high wholesale energy prices. The Energy and Climate Intelligence Unit said its analysis suggests the change could cut energy bills by £25 this winter and £45 next winter if prices remain at current levels.
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Allowing suppliers to recover additional costs due to the energy crisis could result in the price cap increasing to more than £4,200, an industry analyst has predicted. Martin Young of Investec issued the forecast following Ofgem’s announcement it would update the price cap methodology to include an allowance for backwardation costs, which suppliers will recover over a six-month period.
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An Ofwat-commissioned survey into the public understanding of the causes of pollution to rivers and seas has highlighted that many people consider sewage discharges to be the most significant negative impact to waterways, whilst also finding that the majority want to see water companies prioritise cleaning up water bodies, even if that means increasing bills.
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The next price cap coming into effect in October will include an additional £41 uplift to reflect wholesale costs incurred by suppliers as a result of customers shifting onto standard variable tariffs, Ofgem has announced. The regulator said the adjustment is necessary to prevent further supplier failures, the costs of which would be borne by consumers.
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