Customers

Political Agenda this week, by Mathew Beech

“Hard Brexit seems to be the direction the UK is headed”

“Brexit means Brexit” was the default comment from ­Theresa May shortly after she took ­residence in Number 10.

 

Now, that Brexit is set to be a bit clearer following her speech on Tuesday 17 January. Those keen for a close relationship with our European neighbours were left disappointed.

 

Hard Brexit, where the priority is having control of our borders at any cost – including trading links and access to the single market – seems to be the direction the UK is headed. The three Brexiteers of Davies, Johnson and Fox will be delighted.

 

Europhiles, including business and energy secretary Greg Clark, although publicly supportive, may be privately less enamoured.

 

Hard Brexit could see inflation rise, trading becoming more difficult, tariffs imposed, and the costs of importing – ultimately passed on to consumers – increase. This will go for a wide range of products and services, including oil, which has a big impact on the cost of energy.

 

Careful negotiations and precise posturing are essential to ensure, as all politicians say when it comes to Brexit, that we get the best deal for Britain – including the utility companies and their customers.

 

Longer-term impacts on investor willingness to come to the UK and put their cash into big infrastructure projects such as new nuclear will only become clear in time, but a wobble for the pound even before May made her speech is cause for concern.

 

Brexit may mean Brexit, but what that means for utilities and customers still remains unclear.

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Policy & regulation

Political Agenda this week, by Mathew Beech

Policy & regulation

“Can Corbyn fill a full shadow ministerial team?”

Fresh from seeing off the challenge of Owen Smith, Labour leader Jeremy Corbyn has begun chopping and changing his shadow cabinet.

Barry Gardiner, who was almost the entire shadow cabinet – filling three roles simultaneously – has been reined back into a shadow BEIS role, but he retains a shadow cabinet place by staying on as shadow international trade secretary.

Into his business and energy place comes Clive Lewis, who has been shifted sideways from shadow defence secretary.

Lewis, who is seen as one of Corbyn’s potential successors, has been kept in a high-profile role – possibly to prevent another leadership bid. It is also a marker of how high the business and energy brief now is. Plus, Lewis was a junior minister in shadow Decc under Lisa Nandy. Alan Whitehead regains a shadow energy minister brief.

In shadow Defra HQ, Rachael Maskell continues in the role she picked up in June following the wave of post-Brexit, anti-Corbyn resignations and remains as shadow environment secretary.

The bad blood between Corbyn and large swathes of the parliamentary Labour party remains obvious, as the reshuffle crawls on with, at the time of going to print, a number of junior ministerial roles still to be filled.

Reshuffles are usually a time to freshen up the top team, and for the leader to build and boost their support base. With doubts over whether he can fill a full shadow ministerial team, Corbyn still appears to be labouring to win support from the backbenches.

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Policy & regulation

Political Agenda this week, by Mathew Beech

Policy & regulation

“A recalibration of coal closures could be forced”

Energy secretary Amber Rudd must have thought she had put the coal debate to bed when, in her energy reset speech in November, she pledged to phase out all unabated coal by 2025.

Since then, there have been further setbacks to the Hinkley Point project and according to some reports, a change of heart at the Department of Energy and Climate Change (Decc).

Press reports have suggested that those in 3 Whitehall Place are considering reneging – at least partially – on this promise and that partially abated coal generation could be continuing to generate electricity into the latter half of the next decade.

Decc responded with this hard-hitting statement:
“Unabated coal is the dirtiest, most polluting way of generating electricity. The government is absolutely committed to phasing out power production from unabated coal by 2025 and it is nonsense to suggest otherwise. We made this clear last year and nothing has changed.”

However, with Rudd saying on more than one occasion that “energy security has to be the number one priority”, the stance she has taken, and one that Decc has been at pains to reinforce, could be severely tested.

With coal plants closing, little or no new capacity coming online, the 2016/17 winter margins already deemed to be tight, and the realisation that National Grid has issued two notices of insufficient system margin (NISMs) in the past year, a recalibration of coal closures could be forced upon Rudd – or the unfortunate energy secretary dealing with a capacity crisis.

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Policy & regulation

Political Agenda this week, by Mathew Beech

“This may not have been a high-profile Queen’s Speech”

The government set out its plans for the coming year in the Queen’s Speech, with the mantra that less (from the government) is more (for consumers).

Prime minister David Cameron penned a “radical and bold” speech for the head of state to read out in the Lords.

It included the Modern Transport Bill, designed to “ensure the UK is at the forefront of technology for new forms of transport, including autonomous and electric vehicles”.

Away from this, the Tories are set to hand over more planning powers to local communities – including giving them a greater input into whether renewable generation developments will get built.

The Better Markets Bill is designed to give competition in the energy and banking sector a much-needed boost by making it easier to switch – following on from the government’s desire to make 24 hours switching possible. The bill includes a statement that the Competition and Markets Authority’s remedies will be implemented in full, and gives the National Infrastructure Commission more authority.

Finally, the Wales Bill will devolve further powers, including those relating to energy, to the Welsh Assembly.

While this may not have been a high-profile Queen’s Speech, it has stuck to the Conservative philosophy of small government and the belief that competition and markets will deliver better, and cost-efficient, outcomes for the public. Time will tell how much of this agenda will be achieved and how much it will deliver.

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Policy & regulation

Political Agenda this week, by Mathew Beech

“Those on the green benches are the Energy Bill winners”

The game of political ping-pong between the Commons and the Lords is now over. And the winners are those on the green benches, with MPs finally grinding down the resolve of peers and ensuring the new Energy Act 2016 includes the provision for the early closure of the Renewables Obligation to onshore wind projects.

This has been expected by the industry since the day that the Conservatives – who lest we forget promised in their manifesto to “halt the spread of subsidised onshore windfarms” – won a surprise majority in the general election last year.

A third attempted amendment to the Bill was finally voted down in the House of Lords by 204 votes to 109, clearing the path for the early axeing of support for onshore wind.

The Tories will likely be crowing about how the move will save “hardworking families” money on their energy bills.

This could be argued to be a shrewd move. Money is still tight as the economy slowly wakes from its post-crash slumber, and the amount of approved onshore windfarms is already within the predicted range for 2020.

Countering that is the view that the government’s “ideological opposition” to onshore wind is threatening the cheapest renewable technology, and harming investor confidence. The EY index – in which the UK is now 13th – supports that view.

However, with royal assent now granted, one element of that political uncertainty has been removed. There is now just the small matter of the EU referendum.

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Policy & regulation

Political Agenda this week, by Mathew Beech

“Leadsom is not setting out what smart meter success is”

The phrase “shoot for the moon and even if you miss, you’ll land among the stars”, is well known, but seemingly not inside the Department of Energy and Climate Change (Decc), at least when it comes to the smart meter rollout.

Energy minister Andrea Leadsom, giving evidence to the Energy and Climate Change select committee, steadfastly refused to even suggest what Decc would consider a successful smart meter rollout by 2020.

“I am resisting setting a target because, frankly, for the life of me I cannot understand why the committee would expect that,” she said.
“What would be the merit of guessing how many people would accept the offer?”

Decc says that modelling in its impact assessment for the £11 billion project assumes that replacing “97 per cent of the meter population with a smart meter equates to effective completion of the mass rollout”. And former energy minister Baroness Verma said the programme will replace 53 million meters.

However, one of the last members of the ministerial team within Decc to set a target for a government-backed project was Greg Barker, with his now infamous sleepless nights comment if the Green Deal failed to hit 10,000 plans by the end of 2013. It only reached 15,138 plans in progress at the end of October 2015.

Even if the programme lands among the stars, missing the moon would be seen as a failure. One Leadsom is dodging by avoiding Barker’s mistake and not setting out what success is.

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Policy & regulation

Political Agenda this week, by Mathew Beech

“The Paris agreement shows green Tories are not extinct”

Last week saw 175 nations sign the Paris agreement – the deal on climate change that emerged from the crunch UN summit at the end of last year.

While this may have been lost underneath news of Brexit campaigning and US president Barack Obama’s intervention (something prime minister David Cameron must be chuffed about), it remains a significant milestone and shows that the green Tory is far from extinct.

Energy minister Lord Bourne signed the official document, and committing to the deal is something that energy secretary Amber Rudd – one of the green Tories – heartily welcomes.

“The global deal reached in Paris was a significant milestone in tackling climate change, helping to safeguard our long-term economic security and giving clear direction to businesses as we transition to a low-carbon economy,” she said.

But bearing in mind the tumultuous political climate at the moment – not least within the Conservative Party – Rudd was not going to waste the opportunity to promote the ‘In’ campaign.

The energy secretary said that because of its position in the EU, the UK “played a key role in securing the deal” and that it was in the interest of British families and businesses.

What is clear, is that every opportunity between now and 23 June will be seized upon to make the case for – or against – the UK’s membership of the EU. The green Tories, such as Rudd, are likely to be pushing the cause of the Britain Stronger In Europe campaign.

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Customers

Political Agenda this week, by Mathew Beech

“Energy costs have contributed to Tata’s losses”

Often, the debate around energy costs focuses on “hardworking households”.

There has been a significant shift this week on the back of Tata Steel’s announcement that it will sell its entire UK operation.

Tata’s issue is the huge loss its UK arm is making. The Port Talbot plant is losing £1 million a day, while in the past five years its UK steel-making operation has lost £2 billion.

A large part of this problem literally comes from China, and the cheap steel being dumped into the European market, undercutting that manufactured in Britain.

However, energy costs – which energy secretary Amber Rudd has been pushing to see fall – have contributed to the losses faced by Tata and energy intensive industries (EIIs) more widely.

Responding to the steel crisis – which threatens 15,000 jobs at Tata – Decc has set out plans to exempt EIIs from the policy costs of the Renewables Obligation and the feed-in tariff. The move will be worth £400 million to the UK steel industry by 2020 and would come into force in 2017.

Business secretary Sajid Javid was singing from the same hymn sheet as Rudd, saying the government wants to address the high energy costs. “Help with energy costs has been one of the steel industry’s key asks and, having extended last year the compensation we are paying out, I want to see progress on exempting them altogether.”

This leaves one question: with EIIs set to gain further exemptions from policy costs, will the additional burden fall on domestic consumers?

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Customers

Political Agenda this week, by Mathew Beech

“Energy minister will look at ways to help new entrants”

The Competition and Markets Authority has dominated the energy debate in the Palace of Westminster over the past week, but buried amid the talk of prepayment meter price caps, assisting vulnerable ­consumers, and increasing consumer engagement was something else that could give smaller suppliers a boost.

In a Westminster Hall debate, Labour MP Matthew Pennycook pressed energy minister Andrea Leadsom on what else Ofgem can do to help new suppliers to enter the retail market.

In particular, he cited the work of Ofcom with the telecommunications sector to “help new entrants better to understand the regulatory environment”.

Leadsom appeared to take on board Pennycook’s comments, despite saying, “it is something Ofgem is very aware of”.
The energy minister added she will “certainly take that point away and look at it again”, potentially paving the way for Ofgem to assist new entrants to the market, adding to the 35 existing suppliers.

This all ties in with the government’s plan to tackle the “massive challenge” to inject competition into the energy sector, which is seen as a route to increasing customer engagement and lowering consumer bills.

On the subject of cost to consumers, Leadsom added that the price cuts made by the major energy suppliers to their standard variable tariffs were “good news”, but cautioned, “we want to see much more effort” by the suppliers in continuing to cut customer bills.
They have been warned.

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Finance and investment

Political Agenda this week, by Mathew Beech

“Policy changes at Decc have ‘spooked’ investors”

The Energy and Climate Change Committee (ECCC) has published a damning report that says policy changes at the Department of Energy and Climate Change (Decc) had “spooked” investors and “raised serious questions” about the government’s decarbonisation plans.

ECCC chair Angus MacNeil added that a number of “sudden and unexpected changes to policy” had left those with the money wondering what would be next and making them warier to part with the cash.

This obviously touched a nerve at Decc and for energy secretary Amber Rudd, who previously dismissed the notion of investor uncertainty in the sector, telling Utility Week: “I think we have investor confidence.”

So Decc has launched a counterattack to the ECCC report. It has set out the top 10 things it is doing to secure investment in “clean, secure energy”, including plans to reform the capacity market, getting Hinkley Point C built, £500 million for innovation, and support for up to 200 heat networks. Rudd’s department has also been eager to reiterate the energy secretary’s pledge to be “tough on subsidies so that technologies stand on their own two feet”.

What has not been forthcoming is more detail about what the new, and long-term policies are going to be. For example, investors, and industry, are keen to get more detail on the levy Control Framework post-2020.

There are plenty of good intentions from Rudd and Decc, but as yet, not much detail on exactly how these will be made a reality.

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Policy & regulation

Political Agenda this week, by Mathew Beech

“Leadsom cast doubt over the timing of CfD auctions”

Energy minister Andrea Leadsom brought the financial constraints of the Levy Control Framework (LCF) to the fore last week.

Speaking in a ­Westminster Hall debate on biomass, Leadsom referred to the £1.5 ­billion LCF overspend on its £7.6 billion budget, attributed to the successful deployment of solar and onshore wind resulting in higher than expected payments.

She was stating that the next Contracts for Difference (CfD) auction, due by the end of this year, will include dedicated biomass technologies.

However, Leadsom reiterated energy secretary Amber Rudd’s comments from November, and appeared to cast doubt over the timing of the next set of three CfD auctions, by saying “if, and only if, the government’s conditions on cost reductions are met” would funding for the three rounds be made available.

So while on the surface it was good news for biomass generators – and companies thinking of shifting to co-firing or a full conversion – it was made clear the potential support is conditional on further subsidy cuts and ­savings elsewhere in the sector.

Leadsom also came out with some caveated praise for biomass. She acknowledged its renewable and low-carbon credentials, calling it “very valuable” because of its ability to be dispatchable and to deliver baseload electricity. But the energy minister warned it does not “rely on an inexhaustible fuel” like other renewable technologies, such as wind and solar, and that any further biomass expansion in the UK would need to be carefully managed.

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Finance and investment

Political Agenda this week, by Mathew Beech

“Certainty is required to encourage investment”

The starting gun for the summer’s in/out referendum has been fired – and divisions in the government have already become apparent, with six members of the cabinet – and London mayor Boris Johnson – all pinning their colours to the Vote Leave mast.

Within Defra, things are a bit more harmonious. Environment secretary Liz Truss has come out in support of the prime minister’s ambition to keep the UK in a reformed EU, and water minister Rory Stewart also advocates this option.

Over at Decc, the ministerial team are not all singing from the same hymn sheet. Energy secretary Amber Rudd announced her support for the ‘in’ campaign early on, saying in mid-January that Brexit would plunge the energy market into uncertainty.

Energy minister Lord Bourne also appears to be an ‘innie’, having retweeted the prime minister’s comments that “Britain is stronger, safer and better off in a reformed European Union”.

However, the other member of Decc’s ministerial team, energy minister Andrea Leadsom, is an ‘outie’, along with a significant section of the Conservative backbench, and six members of the cabinet.

With European environmental and climate change obligations pressing on the UK, especially in the wake of the COP21 agreement, discord in 3 Whitehall Place is far from ideal.

This is even more pressing when utilities face further uncertainty at a time when certainty is required to encourage investment – much of it from continental Europe – to these shores.

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Policy & regulation

Political Agenda this week, by Mathew Beech

“Decc is looking at a subsidy-free contract for difference”

The government has made its agenda clear since it came into power last May. Subsidies for renewable technologies should be on the downward curve and removed as soon as they can compete financially with more established generation sources.

Solar, wind and biomass have been at the forefront of Tory eagerness to be subsidy thrifty.

At Decc questions last week, the SNP’s Brendan O’Hara called on energy minister Andrea Leadsom to restore investor confidence in the onshore renewable sector, which was badly shaken following the previous swathe of cuts since the Tory election win.

Leadsom hit back: “It is not something that we would introduce just on the back of a fag packet.”

The government, despite dissenting voices on the backbenches, is committed to moving to a lower carbon economy, and that includes a greater penetration of renewable generation – including onshore wind.

The energy minister told the Commons that a subsidy-free contract for difference (CfD) is something Decc is looking at, but “a subsidy-free CfD is not cost-free or risk-free to the bill consumer, and we are absolutely determined to ensure that we keep the costs down for consumers”. She added that the fact the industry is looking at and seeking subsidy-free CfDs “suggests that our analysis that this industry can stand on its own two feet was correct”.

With Leadsom stating her department is ­listening to the industry on how a “market-­stabilising CfD” can be delivered, there is still a green glimmer in the corridors of power.

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Customers

Political Agenda this week, by Mathew Beech

“Even Tory MPs raised ­concerns about fuel poverty”

Rumblings of discontent were heard yet again in Westminster from members of all parties over how the government and industry should tackle fuel poverty.

Led by energy spokesman Callum McCaig, the SNP once again called for a national transmission pricing structure to help those in more remote areas pay less.

Former shadow energy minister Jonathan Reynolds slammed the Energy Company Obligation as “not fit for purpose”, while his Labour colleague Clive Lewis attacked the government for lowering its ambition on energy efficiency. More than five million homes had energy efficiency measures in the last parliament, he said, while the government is planning for only one million between 2015 and 2020.

Even Conservative MPs raised concerns with the level of fuel poverty and the effect it can have on the health and wellbeing of the most vulnerable. Tory David Warburton said “progress seems rather overdue” on the issue.

However, energy minister Andrea Leadsom basically ­swatted away their arguments – especially that of McCaig – ­stating 1.8 million homes would pay more under a national transmission pricing system.

She added the government is “absolutely focused on tackling fuel poverty” and that the new energy efficiency programme will “tackle the root cause” of fuel poverty.

The message was that the government is aware of the problems being raised, and is addressing them. We will find out just how well when the details of the new energy efficiency programme come to light.

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Policy & regulation

Political Agenda this week, by Mathew Beech

“Party divisions make Brexit a thorny issue for the PM”

Prime minister David Cameron has been locked in Number 10 with European Council president Donald Tusk trying to renegotiate the UK’s relationship with the EU – and to avoid the possibility of Brexit.

Divisions within the Conservative party make this a thorny issue for the PM. Five of his cabinet are expected to vote for the UK to leave the EU, while disgruntled backbenchers – including former ECCC member Peter Lilley – are becoming more vocal for Britain to go it alone.

Energy secretary Amber Rudd finds herself in rare agreement with her Labour counterpart, shadow energy secretary Lisa Nandy, on this front. They are both for remaining in the EU. The only caveat is Rudd states she’s in favour of remaining part of a reformed union.

The key comes down to being part of a bigger group and having our voice “heard more loudly”, as Nandy puts it. For Rudd, being part of the EU keeps Britain “in the room” and able to shape energy policy and climate change action.

With the deal Cameron and Tusk have thrashed out set to be put to the other 27 EU member states to decide upon, the looming referendum on Britain’s place within the union is getting closer. It is rumoured the prime minister is keen for the vote to take place on 23 June.

If the details in the final deal satisfy the Eurosceptics in his party and the wider electorate, the referendum may swing in his favour. If not, energy and water policy will need a complete rethink – as will the UK’s place in Europe.

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Policy & regulation

Political Agenda this week, by Mathew Beech

“The RO for onshore wind will end. Except it might not”

The Conservatives were clear in their manifesto. Energy secretary Amber Rudd has made the point crystal clear: there will be no more subsidies for onshore wind.

So much so that the latest Energy Bill – this time originating from the House of Lords – initially had a clause in it to close the Renewables Obligation (RO) a year early to onshore wind.

However, peers in the Other Place were not convinced and overturned this clause. This setback has not dented the government’s, nor Rudd’s, determination to prevent new onshore wind projects being developed.

During the second reading of the Bill in the Commons, the energy secretary said, “there is no ambiguity in the matter,” and reiterated the government’s desire to see the end of onshore wind subsidies. “We will stand firm on them,” she added.

This means in the Commons, where the Tories enjoy a 16-seat majority, they will seek to reinstate the RO ban for onshore wind, and see whether the Lords are up for an energy policy fight.

So the definite end to the RO for onshore wind is definitely going to happen. As long as it gets added back into the Energy Bill and the government can squeeze it past the Lords. That should be the end of it.

But it might not be. DUP MP Sammy Wilson asked Rudd what the consequence would be if the Northern Ireland executive wanted to continue with the RO. The response: “Consumers in Northern Ireland, and not Great Britain, should bear the cost.”

So it’s clear: the RO for onshore wind will end. Probably.

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Carbon capture and storage

Political Agenda this week, by Mathew Beech

“Storage and small nuclear now top the PM’s wishlist”

“I completely disagree. I couldn’t disagree more fundamentally. That is total and utter nonsense.”

Those were the words of the prime minister when quizzed on whether the government was reneging on its environmental responsibility and becoming less attractive for those wanting to invest in green energy.

David Cameron was adamant his government is the greenest ever, and that the UK remains an attractive place for investors in renewables and low carbon.

He told the Liaison Committee that 98 per cent of the solar panels in Britain had been installed while he has been in Number 10.

Counter to this, and the argument put to the PM by ECCC chair Angus MacNeil and Efra committee chair Neil Parish, is the cooling of support for two renewables technologies – or the complete removal of £1 billion in the case of carbon capture and storage (CCS).

The response was the same on both fronts. Cost. Cameron said the £1 billion for CCS would not have been worthwhile as the price of CCS-generated electricity remains too high and would put too much burden on bills.

Tidal energy suffered similarly, despite the PM’s keenness on the idea. “My enthusiasm is reduced slightly by the fact that the cost would be quite high,” he told the committee.

Storage and small modular nuclear reactors now top the PM’s wishlist, with both set to benefit from extra funding, some of which could be from the £1 billion pulled from CCS.

He will just be hoping that investors in the UK share his enthusiasm.

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Policy & regulation

Political Agenda this week, by Mathew Beech

Policy & regulation

“The reshaped Labour party has a lot of learning to do”

Jeremy Corbyn’s rise from left-wing backbencher to mainstream politician and leader of the opposition is now complete.

His coronation by the Labour Party was confirmed on Saturday, and his top team were in place by the end of Monday.

Wigan MP Lisa Nandy has been appointed shadow energy secretary after Caroline Flint decided to step down from the role. Nandy has no previous energy experience. The closest she gets is that she joined the “End the Big Six Energy Fix” campaign in 2012.

Former shadow environment secretary Maria Eagle has been promoted to the role of shadow defence secretary. Filling her shoes is Bristol East MP Kerry McCarthy. She has served in various shadow ministerial roles, including in the shadow Treasury, but this is her frontbench debut. Her environment and water experience is limited to her personal political interests.

Corbyn is new to frontbench politics himself, so the reshaped Labour party has got a lot of learning to do. The party conference season will give Nandy and McCarthy, as well as the rest of Corbyn’s cabinet, an opportunity to start to understand the important issues in energy and water.

On top of that, it will be their first real test as they are tasked with putting across their new leader’s vision for the energy and water sectors.

After all the talk of renationalisation, all eyes will be on Corbyn, Nandy and McCarthy, to see whether that was just campaign talk, or whether there is some substance behind Corbyn’s “personal wish”.

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Conventional generation

Political Agenda this week, by Mathew Beech

“Pressure will mount on government to lower bills”

With the summer recess over, the Westminster machine is firing up again, and the inboxes of the various secretaries of state and ministers are bulging.

The two-week return before parliament breaks again gives the ministerial team a chance to set the tone for the rest of the year and to firm up their positions ahead of the party conference – and for Labour, their next five years as the party elects its new leader (see p10).

Power, as always, will not be far from the minds of those in power, especially as Hinkley Point C crawls towards a final investment decision.

The need for a new power station – even if it is the most expensive one in the world – is great. The closure of old coal-fired plant, and the removal of unprofitable gas stations from the fleet, will see the UK lose 21,400MW of dispatchable generation by next March, with only 6,000MW created. Cue cries for support and stability in policy to avoid a capacity crunch and keep the lights on.

Pressure is certain to mount on government to act to lower energy bills as heating season comes around. With green levies already cut and the Green Deal panned, what wiggle room will Amber Rudd find to help force suppliers to reduce bills?

Water minister Rory Stewart will need to keep his eye on the process of market reform, as the details start to become clearer. He will be eager for the process to go smoothly – not only for the customers that are set to benefit from being able to switch, but to avoid a stain on his political copybook.

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Customers

Political Agenda this week, by Mathew Beech

“Green focus in the Lords is a nod to ‘greenest’ claim”

The Conservatives, and prime minister David Cameron, are often mocked for their claim to be the “greenest government ever”.

This was made before the 2010 general election, which resulted in the Tory-Lib Dem coalition – which both claimed lived up to that moniker – and once again in 2015 before the election.

However, those in the renewables sector will cast a cynical eye over this claim because Decc revealed it could scrap the feed-in tariff (FIT) regime to new applicants from the start of next year if it fails to cut costs.

These cost-cutting measures are set to come in the form of scaling back small-scale solar subsidies by more than 80 per cent and some subsidies for onshore wind removed entirely.

Cue the outrage: “This is the antithesis of a sensible policy”; “it looks as if the long-term vision has been lost”; and “it is quite simply terrible news”.

On the other hand, those within government will point to ongoing support for other low-carbon technologies, and the appointment of green-thinking peers to the House of Lords.

Former climate change minister Greg Barker, Lib Dem energy spokesperson Lynne Featherstone, and the Tory heavyweight William Hague all add to the green focus in the Upper Chamber.

With the latest Energy Bill starting its journey through parliament, having a few more green thinkers in the other place is at least a nod towards the claim of this being the greenest government ever – even if scaling back renewables subsidies appears to show otherwise.

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Policy & regulation

Political Agenda this week, by Mathew Beech

“Farron had to get creative with his appointments”

Tim Farron is portraying himself as the saviour of the Liberal Democrats, the man to lead what they are calling the “fightback” after the party was decimated in May’s general election.

From being in government, with 57 MPs and a 23 per cent share of the vote in 2010, the Lib Dems crumbled to eight MPs and less than 8 per cent of the vote.

If sitting among his seven fellow election night survivors on the opposition benches wasn’t enough of a demonstration of how far the party has fallen, Farron was reminded when he appointed his key policy figures.

With 21 roles to fill, and only seven MPs to choose from, Farron has had to get creative with his appointments.

The starkest reminder will come from energy and climate change. For five years, this was a Lib Dem area in government, with Chris Huhne and then Ed Davey leading the department.

Now, aiming to fill the shoes left behind by the deposed and defeated Davey, is Lynne Featherstone. Ex-MP Featherstone, who was one of the many who lost their seats in May.

For the environment ­portfolio, Farron has chosen someone who graces Westminster, but the Lords rather than the Commons: Baroness Parminter.

In the 22 roles including Farron’s, there are six MPs, ten from the Lords, and six just from the rank and file party members, with no central government roles.

The fightback may be under way, but it is a long and hard road back to Parliament’s top table, especially when some of the team leading the resurgence is on the outside looking in.

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Finance and investment

Political Agenda this week, by Mathew Beech

“The government gets tough on renewables”

In their productivity plan the Conservatives have held up as the blueprint for a strong, vibrant British economy, one key element is ensuring the country has a reliable and low carbon energy system.

The way to achieve it, as set out in the Tory plan, and continue the long-term decarbonisation of the UK’s energy sector, is through a framework that supports cost-effective low carbon investment.

One of the cheapest forms of low carbon generation available is onshore wind, the sworn enemy of middle England.

So instead of welcoming in a new era of windfarms, the government has given the sector a kicking.

The promise to “halt the spread of onshore wind” was one of the first things energy secretary Amber Rudd dealt with shortly after returning to Decc, ending the Renewables Obligation a year early for onshore wind.

Next up, chancellor George Osborne in his summer budget, hit the renewables sector again by removing their exemption to the Climate Change Levy. This is expected to cost the sector hundreds of millions of pounds, as the Treasury claws back £3.9 billion over the parliament.

Tories tell you this is weening lower cost renewables off subsidies to prevent additional costs being placed on consumer’s bills. Critics will claim this is the Tories turning their back on low cost, low carbon technologies.

As always, the reality is probably somewhere in between, but it remains painful for the renewables sector.

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Policy & regulation

Political Agenda this week, by Mathew Beech

Farming is seemingly taking a higher priority than water in the new-look Efra committee, says Mathew Beech

The Commons select committees are taking shape. The chairs have been named and now we know who most of the members will be.

But those of you with a keen interest in water who are hoping the make-up of the Environment, Food and Rural Affairs (Efra) committee will reflect that, may be somewhat disappointed.

Conservative chairman Neil Parish is a relative old hand, having been a member of the Efra committee for the full duration of the last parliament. This means he is no stranger to the issues of the water sector, ­having been part of six inquiries looking at it over the past five years.

Despite this, his interests appear worryingly free of anything water-related: the four he has listed are regional policy, animal welfare, agriculture, and EU enlargement.

Parish will be joined by fellow Tories Chris Davies, Simon Hart, Rebecca Pow and Rishi Sunak. Labour’s Jim Fitzpatrick and Harry Harpham as well as the SNP’s Paul Monaghan will also take up their places when the Efra committee sits for its first meeting.

None of these new faces have a registered interest in the water sector, with farming seemingly taking a higher priority among the new-look 2015 committee.

The new Efra committee appears to be closely following the department it is going to be scrutinising. ­Environment secretary Liz Truss has already earmarked food production, agriculture and farming as her, and Defra’s, priorities for the next five years.

The new parliament risks being a little light on water over the next five years, exactly when political scrutiny is required, with the non-domestic retail market due to open in April 2017.

Water minister Rory Stewart is set to have market reform as his water priority – despite not listing water as a political interest – and in a couple of keynote speeches highlighted recycling and resource management as his main areas of focus.

Things for the Energy and Climate Change committee (ECCC) – which former shadow energy minister Tom Greatrex warned could risk losing credibility due to the lack of energy experience of SNP chair Angus MacNeil –are slightly different.

Labour’s experienced heads of Alan Whitehead and Ian Lavery are set to return to the committee, ­bringing with them a wealth of knowledge that will be vital. Their keen energy eyes and depth of understanding will be welcome as the new-look committee get to grips with CfDs, the LCF, the RO, the Eco, SMETS2, and everything else that makes up energy policy.

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Customers

Political Agenda this week, by Mathew Beech

“Reducing big six’s market share will be a Rudd priority”

In the first energy and climate change question session of the new parliament, energy secretary Amber Rudd and energy minister Andrea Leadsom were asked repeatedly to defend the decision to end the ­Renewables Obligation a year early for onshore wind.

Faced by shadow energy minister Julie Elliott, Leadsom stuck to the tried and tested line that this is all about cutting costs and saving the consumer money.

“We cannot simply keep putting up the costs to the bill payer. My Department’s priorities are to keep the bills down while decarbonising at the lowest cost possible, and that is what we will do,” she said.

“We do not want permanently to subsidise an industry that has the ability to stand on its own two feet.”

Saving money for consumers was something Rudd returned to – this time on the issue of the imminent CMA inquiry findings.

When questioned by shadow foreign affairs minister Kerry McCarthy on what should be done to stop the “persistent exploitation” of sticky customers, Rudd said she awaited the CMA’s findings with great interest, but hinted that the government will step in: “There are still people on a default tariff, so something needs to be done to access them. I very much look forward to [the CMA’s] response and, hopefully, to taking its guidelines to ensure we address that.”

What the action will be remains unclear, but promoting switching and reducing the big six’s market share look set to be a priority for Rudd. The major suppliers have been warned.

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Policy & regulation

Political Agenda this week, by Mathew Beech

“SNP’s growth spurt has left its expertise thinly spread”

The SNP is loving life as a significant player in Westminster and enjoying the fruits that come with being the third largest party in the House of Commons.

Within the first month, the fledgling MPs have already tried to take the government to task by lodging early day motions calling for rethinks on onshore wind and small-scale hydro subsidy cuts – funnily enough, both things Scotland is blessed with.

But the SNP’s rapid growth spurt – climbing by 50 to 56 MPs – has left its expertise and understanding of the Commons thinly spread, with only six experienced MPs, plus the wily political campaigner that is its former leader, Alex Salmond.

Once the important jobs and major priorities – chief whip, Westminster leader, and so on – were dealt up, there were no key figures to become chairman of the Energy and Climate Change Committee.

In the end, the SNP’s pick was Angus MacNeil, one of its few MPs with knowledge of Westminster. But the failure to appoint Salmond, or previous energy spokesman Mike Weir, puts energy in a second tier of priorities, behind those of European and Scottish affairs.

MacNeil, who does not have a registered interest in energy, follows in the wake of Tory grandee Tim Yeo. The work of select committees isn’t new to him though, having previously served on the Scottish Affairs Committee for three years from 2005.

But without an experienced energy head, MacNeil will have to get to grips very quickly with the complicated legislation that surrounds the UK energy sector.

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Customers

Political Agenda this week, by Mathew Beech

“Ed’s promises have been echoing around Whitehall”

The ghost of Ed Miliband – well, his general election campaign, because he can still be found on the Labour backbenches – is looming large over parliament.

Think back to red Ed’s heyday, in the autumn of 2013, when his energy reform ideas grabbed the headlines and set the political agenda. He was calling for action on energy bills, targeting the big six in particular.

Behind the price freeze promise there was also a plan to create an Energy Security Board – an independent body, similar to the Office for Budget Responsibility – to provide impartial data and help direct the best course of action to decarbonise the UK’s energy system.

Well, these promises appear to have been echoing around the sector. And Whitehall.

Conservative energy secretary Amber Rudd has demanded that energy suppliers – in particular the big six – act to cut their bills and make them reflect the recent (downward) movement in wholesale prices. She says with the threat of the price freeze now gone, there are no excuses for the savings not to be passed on.

And the Energy Security Board seems to have morphed into the Office of Energy, with key industry figures, including Npower’s Paul Massara, calling for the body to ensure there is “clear analysis of the performance and impact of all actions in delivering affordable secure low-carbon energy”.

So even though Miliband has left the political front line, there may be a legacy from his time as Labour leader. Something other than a backbench seat in the Commons, that is.

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Gas transmission/distribution

Political Agenda this week, by Mathew Beech

“Government is looking to tackle the energy trilemma”

In the first all-Conservative prepared Queen’s Speech for 19 years, the new government unveiled its grand plans for the coming parliament – with some echoes from 1996.

The John Major-led government proposed plans to support a “flexible” European Union, for construction to start on HS1, and for terrorism to be tackled.

David Cameron’s first solo Queen’s Speech saw pledges for a European Union in/out referendum (after he has renegotiated Britain’s relationship); to press ahead with legislation to allow HS2 to be developed; and for extremist behaviour and propaganda to be clamped down on.

One thing in the 2015 version that was missing in 1996 was the pledge for another Energy Bill – less than two years since the last one received Royal Assent.

New energy secretary Amber Rudd will be tasked with guiding the bill through parliament, and ensuring measures to increase energy security.

The Oil and Gas Authority will be nurtured into a fully functioning regulator with the intention to strengthen security of gas supplies for the UK and to squeeze as much as possible from the North Sea reserves.

Affordability is another challenge Rudd will have to meet.

The third leg of the trilemma – not to be forgotten despite Tory opposition to onshore wind – will be dealt with by shifting responsibility for granting consent to turbines to local councils.

It may have been a Queen’s Speech of deja vu, but the government is looking to tackle the energy trilemma, and it will have no one else to blame if it fails.

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Policy & regulation

Political Agenda this week, by Mathew Beech

“Amber Rudd has been getting down to business”

As the class of 2015 made their way to Westminster for the first day of the new parliament, newly promoted energy secretary Amber Rudd was already at her new desk at Decc.

In the Conservative manifesto, and what should be the blueprint for this 12-seat majority Tory government, there were promises to “halt the spread of onshore wind” and to develop the shale gas sector in the UK.

Rudd has wasted little time and already committed to bring in legislation to stop any new subsidies for onshore wind by May 2016.

This is perhaps less scary for the renewables industry when you realise that her predecessor, the deposed Ed Davey, wrote in September that there was already enough onshore wind currently going through the planning system for the UK to hit its 2020 renewables target.

Fracking is another area where Rudd is already looking to make headway. While the headstrong “going all out for shale gas” comment made by prime minister David Cameron in January 2014 was watered down in the manifesto – “we will continue to support the safe development of shale gas” – moves are happening behind the scene to support the nascent industry in the UK.

Decc is already recruiting three senior policy advisers to the ministerial team to help fracking in the UK to bloom, and to boost the UK’s gas supplies.

While the SNP and Labour bickered over who is going to sit where in the Commons, Rudd has been getting down to business.

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Customers

Political Agenda this week, by Mathew Beech

“The truth was merrily ­manipulated in the House”

Eon dropped its gas price just in time for yet another gladiatorial clash in the House of Commons.

Labour used one of its allotted opposition days, yet again, to debate energy at a time when its price campaign has been given a shot in the arm by falling wholesale energy prices.

But the truth of the ­matter – consumers getting a lower gas bill as prices have been cut – was merrily manipulated and contorted to fit the argument from either side of the house.

Shadow energy secretary Caroline Flint flung out figures showing wholesale gas prices had fallen by up to 30 per cent over the past year – and said the “paltry” 3.5 per cent cut was evidence “Eon has still pocketed most of the savings”. Labour says this is why new legislation needs to be fast-tracked through the Commons – to give the regulator new powers and make it force the suppliers to pass on falling wholesale prices.

Unsurprisingly, the coalition quashed any chance of that happening. Energy secretary Ed Davey said forcing suppliers to do that would result in yo-yo pricing for consumers, which is something that nobody wants.

Davey crowed: “The ­exciting news is competition from smaller suppliers is now forcing the big six to act.” Eon’s price cut and latest consumer offer are evidence of this, he said.

It is amazing the impact red, blue or yellow tinted spectacles have on what is something as simple as falling wholesale costs being passed on to consumers.

But to misquote Mark Twain: “Never let the truth get in the way of a good energy debate.”

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Policy & regulation

Political Agenda this week, by Mathew Beech

“If the Greens are included, Cameron’s excuse has gone”

The TV debate argument could reveal just how clever the Conservatives and David Cameron are being.

The prime minister said he will not take part in any televised debate unless the Green Party – which despite polling more than the Lib Dems is not considered a major party because it has only one MP – is included.

At face value, Cameron’s calls for Green leader Natalie Bennett to join the Tories, Labour, the Lib Dems and Ukip – which is now considered a major party because it has two MPs – seem valiant. A cry for inclusivity.

However, knowing that Ukip is hunting Tory votes, that Ed Miliband is an accomplished orator, and Nick Clegg’s 2010 performance took him into government, the PM’s motives are more likely less noble.

The Greens are likely to trump Labour on the left and the Lib Dems on the environment. Plus, having them involved will limit the time Nigel Farage gets on camera to outflank the Tories on the right. It’d be a win-win.

But this is a gamble. Not only does Cameron face calls of cowardice for backing out, but now that an ultimatum has been issued, if the Greens are included, his excuse has gone.

And should we see a five-way debate, the Greens may trump the Tories and their “greenest government ever” claims on the environmental front. Cue Green shouts of fossil fuel subsidies, expensive nuclear, onshore wind blocking, and fracking pollution.

Cameron has a high risk, but potentially a high reward, strategy. One that could mean he keeps the keys to Number 10.

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Policy & regulation

Political Agenda this week, by Mathew Beech

“The big three may have to adopt other parties’ policies”

Happy general election year! But, with four months to go, energy and water have fallen off the political agenda. Yes, the opposition is continuing to call for reform of the industries, but it is being drowned out by more emotive and headline-grabbing subjects: an immigration crisis; an NHS crisis; a cost of living crisis; a constitutional crisis.

Next to these, the energy and water industries have got lost – but not because nothing is happening. Ofwat has imposed a strict price control for water companies, while Ofgem has put DNOs on meagre rations.

Plus, if Ed Miliband gets his way, utilities will have to tighten their belts even further as caps, reforms and freezes are introduced.

However, the Greens, the SNP and Ukip are gaining increasing influence in Westminster. In Scotland, the pro-renewables, anti-nuclear SNP is predicted to do significant damage to Labour. It could hold the balance of power in the House of Commons if it abandons its England-only abstention.

The Green Party is chipping away at the socialist left and trumpeting energy efficiency and a transition to renewable energy projects. It is also pushing for increased water sustainability.

Ukip has proposed repealing the Climate Change Act, urged a fracking hurry-up and attacked – again – renewable energy.

With the big three seeking to secure their voter base, they may look to adopt some of these parties’ policies before the election, or they risk of having to implement them afterwards in the form of coalition concessions.

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Customers

Political Agenda this week, by Mathew Beech

“Labour needs a bounce to boost its election hopes

Shadow energy secretary Caroline Flint must have had a shock when she arrived at her office last week, because it appeared to have been ransacked by a fellow shadow cabinet member. Where is the evidence, you may ask. Just look at the contents of Maria Eagle’s latest policy for the water sector.

Labour’s latest attack on the utility sector came from a debt management centre in Essex. The rhetoric was that the big water companies are not treating customers fairly and need to be forced to put them on cheaper tariffs or face the consequences from a beefed-up regulator. Yes, I am referring to water, not the energy sector.

This is not the first time Eagle has hinted at her party’s stance to get tough with the water companies. She mentioned it at the party conference in September, although it got lost in the fallout of Miliband’s economic amnesia.

Undeterred, Eagle again outlined the National Affordability Scheme, under which water companies would be forced to put customers on cheaper tariffs.

Why is Labour taking this hardline stance? Bills are set to fall by 5 per cent in real terms under the next price control period and more social tariff schemes are being introduced.

The answer lies in the polls. With the lead built on the back of the price freeze pledge and hard-hitting attitude towards the energy sector dwindling, they need another bounce to boost their election hopes. Attacking the utilities worked last year, so Labour is hoping the identikit policy for water will achieve the same result.

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Policy & regulation

Political Agenda this Week, by Mathew Beech

“Some say the quality of EMR is being compromised”

In a world where patience has been eroded by the immediacy of the internet, the archaic law-making of Westminster is often criticised for being far too ponderous.

However, Electricity Market Reform (EMR), the cornerstone of the Energy Act – which itself took an age to enter the statute book – has been slammed for being rushed and some say the quality of the whole reform programme is being compromised.

A lot of the EMR package was left out of primary legislation – much to the annoyance and protestations of the opposition – and the gaps are being filled via secondary legislation, which escapes the same scrutiny by Parliament.

Some claim that to get everything done and in place in a timeframe that the industry and investors require, it is being rushed through.

Decc denies this and says the whole process is open and transparent. But, as one observer put it, while the government may be moving a lot slower than parts of the industry want, it has to move quicker than it traditionally does to ensure it happens at all.

You can almost see the opposition argument being formed – a slapdash government that ploughs ahead ignoring the many to listen to those with the money. An “underinvestment legacy” riposte will probably be fired back from the government.

This leaves the industry as usual hanging on for the details with fingers crossed that once they’re in place, the general election won’t throw an Ed Miliband-shaped spanner in the works, leading to a whole new model.

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Policy & regulation

Political Agenda this week, by Mathew Beech

“The Lib Dems are fighting for their political futures”

It is April 2015 and Decc has just published the latest Ed Davey speech. It reads: “Hello and it is a pleasure to be here today. [Political content removed.] “Thank you and goodbye.”

That is all Decc will be able to publish, if Davey continues ramping up his partisan positioning.

With less than six months to go until the general election, the energy secretary seems to have taken this as the starting pistol for the race to Westminster.

He has become increasingly vocal over the poor legacy left by Labour and continued to attack Ed Miliband’s price freeze plans.

And the emboldened Davey has also set his cross-hairs on the Tories – in particular, their loathing of onshore wind. This, he said – but not according to the Decc records – would be a “mistake of historic proportions”.

He even went on to say “these latest Tory green wobbles may be explained by Nigel Farage” and that the detestation for onshore wind is spreading to solar – and potentially further into the renewables sector.

As to why Davey is grandstanding, attacking red and blue left, right and – well, not actually centre – it is party politics but also internal party politics.

The Lib Dems need to shout about what they achieved in government and what they stand for. If they fail, they will be lost under the unambiguous tidal wave that is Ukip and the squabbling Labour and Tories. They are fighting for their political futures.

As for Davey, making lots of noise that will resonate with core Lib Dem voters is a canny move – and one that will bolster his burgeoning leadership ambitions.

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Policy & regulation

Political Agenda this week, by Mathew Beech

Eagle attacks Tories for undermining solar power

On the 40th anniversary of the Rumble in the Jungle between Muhammad Ali and George Foreman, Labour’s shadow environment secretary wanted to knock out her opposite number.

In Defra orals, Maria Eagle attacked Elizabeth Truss, and the Conservatives, for having an “ideological prejudice” against large, ground-mounted solar.

This followed the government’s statement that farmers will no longer receive subsidies under the EU Common Agricultural Policy if they cover their fields with solar panels. Truss said putting the “unsightly” panels on prime agricultural land will harm the rural economy and jeopardise the Tories’ long-term economic plans.

“Evidence! Where is the evidence?” cried Eagle and the shadow Defra team.

Using Ali’s rope-a-dope tactics, Truss soaked up the presssure then hit back saying solar panels should be put on commercial and industrial rooftops.

But, seizing the moment and using the publication of National Grid’s Winter Outlook to back up her argument, Eagle counter-punched once more.

She said these fields – that the NFU says can support agriculture and solar farms – should be used to boost the UK’s dwindling energy capacity.

Truss, shouting ever louder, failed to answer the question of a lack of evidence.

Heavy blows were traded, but no knockout punch was landed. Eagle was on the front foot, but Truss and the Tories will hope to weather the storm and launch a fight back of their own, as Ali did in Zaire in 1974.

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Domestic water retail

Political Agenda this week, by Mathew Beech

“The reinvigorated Lib Dems are making a stand”

The impetus on energy seems to have shifted from the red and into the yellow – and remains well clear of the blue.

Labour – so successful a year ago in taking the lead in the debate – seems to be struggling to continue to sell the price freeze. Knowing it is a hard sell to the industry, shadow energy secretary Caroline Flint appealed to the sector to work with her party to make the best of it – not only for consumers but for the companies themselves as well.

But the momentum Ed Miliband built up has slipped away and the reinvigorated Liberal Democrats are making a stand.

Energy secretary Ed Davey must have got the same memo that water minister Dan Rogerson (see interview, p8) received, as he also went on the offensive.

At the Energy UK annual conference, Davey took his customary pot shots at Labour – the price freeze “would destroy the very competition that has been painstakingly built up” – but he also gave the Conservatives a not so subtle whack in the ribs.

Not only did he sing the praises of being part of Europe, stating the UK will have a more secure energy supply as a member of the EU, he also attacked the Tory hatred for onshore wind, describing “any party that takes wind off the table” as “reckless”.

A few months ago, the Lib Dems were slipping towards general election oblivion with the Tories taking all the credit for the coalition’s achievements, Labour pushing the cost of living crisis, and Ukip scooping up all the disillusioned voters. But now it seems like they are very much up for the fight.

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Heat networks

Political Agenda this week, by Mathew Beech

“Paterson has made some serious points on energy”

After a party conference with a deafening silence on energy policy, finally a senior Tory has come out and put forward some plans for the UK’s energy future.

However, probably to the dismay of the husky-hugging prime minister, that Conservative was Owen Paterson – the dethroned environment secretary.

He came out and said the Climate Change Act – something he voted in favour of – should be suspended or even repealed.

This will not happen: no ­government could take the stance of turning its back on the legally binding commitment.

However, Paterson did push the case for small modular nuclear reactors, combined heat and power (CHP) plants and demand management, as well as indigenous shale gas.

These points have been lost in the outrage, but away from the vitriol directed at Paterson, there is a semblance of sense.

Demand management is starting to be introduced and there are calls for DSR to be able to bid into the demand-side response market.

CHP would also help to reduce energy bills, helping in particular those in fuel poverty to heat their homes.

Small nuclear reactors – still some years away – could allow for a quicker rollout of new nuclear and open up new ­potential sites. And shale gas, the fabled “bridge” fuel, could help displace coal generation and increase the security of the UK’s gas supplies.

In his own unique style, Paterson has made some serious points on the energy debate. Not that anyone will listen to him.

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