Questioned yesterday by the energy and climate change committee about the capacity mechanism and contract for difference, Hendry did not rule out suggestions from Alan Whitehead, Labour MP for Southampton Test, that a new energy bill might not appear until autumn. Whitehead said that last year’s White Paper had indicated a spring introduction.
“You don’t pre-empt the Queen’s speech,” Hendry replied, “but we are meeting all our own timetables for an early introduction of the bill.” Pressed on whether all the necessary elements of the CFDs would be in place by 2014, Hendry answered that government would give investors the certainty they need to build new plant “within the timescale that we said we would”.
On the state aid question, Hendry said that EU and UK policies were aligned. ” understands that this is an integral part of meeting . From the discussions we have had so far we are strongly encouraged.”
Hendry insisted that government, not National Grid, would make policy decisions and that “glass walls” between National Grid’s new role and its position as gas and electricity system operator would prevent major conflicts of interests.
Under Decc’s proposals, National Grid will manage the capacity market as well as deliver the Feed-in Tariff with Contracts for Difference (Fit CfDs), which give generators guarantees that they will receive a set price for their power.
That has raised concerns that too much influence may rest with one company. Hendry said that National Grid’s experience and position in the market meant that reforms could take place more quickly than building a new body from scratch.
Asked about what might happen if National Grid was subject to a takeover, or went bust, Hendry said that both scenarios had been considered.