by Janet Wood
A phrase in the impact assessment of the Energy White Paper saying the government would be the counterparty in the contracts for difference (CfD) regime was “badly drafted”, Jonathan Brearley, director, energy markets and infrastructure, at the Department of Energy and Climate Change (Decc) told MPs. He said that it had never been the case.
Brearley and his secretary of state, Ed Davey, told the surprised Energy and Climate Change Committee there would be a new impact assessment published alongside the final draft bill.
Davey did his best to instil MPs with confidence in the multiparty option by highlighting its similarities with the Renewables Obligation, and by saying that because it was subject to contract law it would offer investors lower political risk. However, he and the committee disagreed over whether
investors would accept that.
He did win approval from chairman Tim Yeo when he suggested the need to meet legal obligations on carbon emissions would trump the levy cap if there was a clash.
Davey also tried to reassure potential investors in new gas plant. Asked about the capacity market, he said “new capacity now will count as new capacity in a future mechanism”. But the department had few ideas to offer on demand-side measures, beyond saying the demand side would be treated on an equal basis with generation in a capacity mechanism.
Earlier in the committee’s marathon five hours of evidence, National Grid executive director Nick Winser sparked Yeo’s ire when he said the firm was keen to debate issues such as CfDs. Yeo said those discussions should have happened over the previous 18 months and it was “staggering to say we should still be having a debate”.
Bandied about: RO review ‘this summer’
Ed Davey said he hoped to publish Decc’s long-awaited Renewables Obligation banding review “before the summer recess”. Energy minister Charles Hendry emphasised the complexity of the process, saying it was not a single re-examination but a review of 29 different mechanisms. The department had received around 4,000 responses to its consultation.
Meanwhile, a timetable for the Energy Bill that would see royal assent “by the end of 2013” instead of earlier in the year “comes as a surprise to us”, said committee member John Robertson. He countered Davey’s claim that the timetable was “well known” by saying that EDF Energy chief executive Vincent de Rivaz had told the committee he expected assent earlier in the year.
This article first appeared in Utility Week’s print edition of 29 June 2012.
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