This update contains brief details of Government and EU publications, legislation, cases and other policy developments in England and Wales relevant to those interested in energy, renewables, energy efficiency and the alternative energy sector, which have been published in the past month.

Items are set out by subject, with a link to where the full document can be found on the internet. All links are correct at the date of publication.

If you have been forwarded this update by a colleague and would like to receive it direct please email Claire Booth.

The following topics are covered in this update:

   Community Energy    Enforcement
   Competition and State Aid    Green Deal
   Electricity Market Reform    Health and Safety
   Emergency Planning    Hydropower
   Emissions Trading    Procurement
   Energy Efficiency    Shale Gas
   Energy Policy    Smart Meters

Community Energy

LGA: Collective switching framework launched: announces the launch by the LGA, in partnership with switching provider iChoosr, of a new framework that provides advice and support for local authorities who wish to set up collective energy switching programmes, signing up residents and negotiating cheaper energy prices on their behalf. Local authorities who sign up will be able to join the next collective switching auction in February, with further auctions in May and October 2014. (7 January 2014)

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Competition and State Aid

European Commission: State aid – Commission opens in-depth investigation into UK measures supporting nuclear energy: announces that the EC has opened an in-depth investigation to examine whether UK plans to subsidise the construction and operation of a new nuclear power plant at Hinkley Point in Somerset are in line with EU state aid rules. In particular, the EC has doubts that the project suffers from a genuine market failure. During the inquiry, the EC will analyse whether the measure involves state aid in the meaning of the EU rules and, in the affirmative, whether it is compatible with common EU rules that authorise state aid for certain objectives of common interest. (18 December 2013)
See also the Energy Secretary's Written Ministerial Statement on the EC's decision to open an investigation into the State aid case for the proposed Hinkley Point C investment contract.

European Commission: Draft guidelines on environmental and energy State aid for 2014-2020: seeks views on draft guidelines that set out the conditions under which State aid measures may be declared compatible with the internal market. The guidelines apply to State aid granted for environmental protection or energy objectives in all sectors governed by the EU Treaty in so far as measures are covered by section 1.2. They also apply to those sectors which are subject to specific EU rules on State aid (transport, coal, agriculture, forestry, and fisheries and aquaculture) unless such specific rules provide otherwise. The consultation closes on 14 February 2014. (18 December 2013)

Ofgem: State of the market report – Assessment framework: sets out how Ofgem, the OFT and the CMA will assess the state of competition in the energy markets in Great Britain, and how well competition is serving the interests of households and small firms. The framework will be used to look at the market share that the six largest suppliers have, how vigorously they are competing and how easy it is for new entrants to enter the market and compete against larger suppliers. It will also look at how the vertical integration of suppliers affects competition, and how well suppliers engage with consumers. Ofgem and the OFT will use the framework to produce the first annual review of the market in March 2014. (19 December 2013)

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Electricity Market Reform

Energy Act 2013: the Energy Act has received Royal Assent. In particular, the Act establishes the Electricity Market Reform framework for delivering secure, affordable and low-carbon energy, including provisions on Contracts for Difference (CfD) and investment contracts, the capacity market, liquidity and market access, institutional arrangements in relation to the delivery of these schemes, a transition to a certificate purchase scheme for generation supported by the renewables obligation, and emissions performance standard for new fossil-fuel plants. The majority of the Act comes into force on a day, or days, to be appointed; however, some parts, including Part 2 Chapters 2 - 4 on contracts for difference, capacity market and investment contracts, came into force on 18 December 2013. Other sections, including Part 2 Chapter 6 on access to markets, come into force on 18 February 2014. (18 December 2013)
For a detailed summary of the Act, see DECC's Energy Act policy briefs.

DECC: Electricity Market Reform Delivery Plan: sets out the strike prices for renewable technologies under Contracts for Difference (CfD) as well as the analysis underpinning these decisions. It confirms that the reliability standard that will guide the level of capacity that is contracted within the Capacity Market is a Loss of Load Expectation (LOLE) of 3 hours/year. This translates as a system security level of 99.97%. (19 December 2013)
DECC has also published additional documents supporting the Delivery Plan: 

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Emergency Planning

DECC: Customer communications at heart of review into dealing with widespread power cuts: announces that DECC is to conduct a review into the power disruptions which affected 750,000 households over Christmas 2013. The review will focus on communications with household energy customers, necessary resources to be able to cope with widespread disruption, and the compensation process. There was also agreement to investigate as quickly as possible the setting up of an emergency telephone number which households can call if they experience a power cut. It will report to the Energy Secretary within two months, and will feed into a wider review of severe weather response and resilience being led by DEFRA and the Cabinet Office. (8 January 2014)

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Emissions Trading

Greenhouse Gas Emissions Trading Scheme and National Emissions Inventory (Amendment) Regulations 2013 (SI 2013/3135): these regulations, which come into force on 31 January 2014, amend the Greenhouse Gas Emissions Trading Scheme Regulations 2012 (SI 2012/3038) and the National Emissions Inventory Regulations 2005 (SI 2005/2903). They harmonise and improve enforcement regimes, update provisions relating to the registries of emissions allowances and of project credits under the Kyoto Protocol and correct the drafting of a number of provisions to improve clarity and ensure consistency. (13 December 2013)

Environment Agency: European Union Emissions Trading System (EU ETS) Phase III – Guidance for installations: How to comply with the EU ETS and Small Emitter and Hospital Opt-Out Scheme: guidance to help both existing and new participants of the EU ETS as well as participants in the Small Emitter and Hospital Opt-out Scheme understand the schemes and what they have to do to comply with them. It gives an overview of the EU ETS and helps operators find out whether the Regulations apply to them and if they need a permit. (23 December 2013)

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Energy Efficiency

DECC: Energy Efficiency Strategy – 2013 Update: charts the significant progress that the Government has made on energy efficiency over the last 12 months, including action taken to stimulate the energy efficiency market, and outlines the Government’s key upcoming energy efficiency priorities over the next year or so. (16 December 2013)
There is also a Statistical Summary that presents a range of evidence on energy consumption, energy savings, and energy efficiency measures, together with indicators and international comparisons.

DECC: Government response – Warm Home Discount: Flexibility for higher spending: sets out the Government's response to the September 2013 consultation that proposed allowing participating energy suppliers to spend more money on the Warm Home Discount this scheme year (2013/14) than they are currently required to spend. The response confirms the initial proposal. Subject to the agreement of Parliament, DECC will amend the Scheme Regulations in order that suppliers can spend 34% above their non-core spending obligation in 2013/14 and thereby reduce their non-core spending obligation in 2014/15. It states that this change will lead to more low income vulnerable households receiving £135 rebates off their electricity bills this year than would have been the case otherwise. (16 December 2013)

Environment Agency: Regulatory Position Statement (RPS) – CRC Energy Efficiency Scheme Phase 2 registration: the CRC Energy Efficiency Scheme Order 2013 requires qualifying organisations to register by 31 January 2014 for Phase 2 of the scheme (2014/15 to 2018/19). This RPS reflects a proposed change to the rules regarding how CRC participation interacts with Climate Change Agreements and the EU Emissions Trading System. It applies to landlords who presently qualify for Phase 2 but would not qualify if the law is amended as intended so that their supplies of electricity or gas to tenants’ CCA facilities or EU ETS installations are excluded. It explains how these landlord organisations can avoid being at risk of enforcement action in respect of the current registration obligation. (23 December 2013)

Energy Efficiency (Eligible Buildings) Regulations 2013 (SI 2013/3220): these regulations, which come into force on 15 January 2014, transpose the requirements of Art.5 of the Energy Efficiency Directive 2012/27. They set an energy savings target of 163.6Gwh to be achieved by 31 December 2020 by the Secretary of State, the Scottish Ministers, the Welsh Ministers and the Northern Ireland departments in buildings that are owned and occupied by central government. They also place a duty on these authorities to encourage public bodies to develop energy efficiency plans which include specific actions to promote energy efficiency. The Secretary of State must publish a report on the operation and effect of these regulations by 14 January 2019. (18 December 2013)

DECC: Implementing the Energy Efficiency Directive as it applies to the metering and billing of heating and cooling: seeks viwws on the Government’s approach to implementation of Arts.9, 10, 11 & 13 of the Energy Efficiency Directive 2012/27 as they apply to district heating, district cooling and communal heating and/or hot water. The Directive contains some mandatory requirements for metering and billing; other requirements will be subject to tests of cost-efficiency and technical feasibility. The consultation proposes a number of ways to implement these requirements. The responsibility for implementation and therefore the impacts will rest primarily with the owners of such schemes. The consultation closes on 21 February 2014. (10 January 2014) 

DECC: Implementing the Energy Efficiency Directive provisions on gas and electricity billing: seeks views on the approach to the implementation of the billing elements of Arts.10 & 11 of the Energy Efficiency Directive 2012/27 that set out requirements on regular billing and billing based on actual consumption, the provision of information to energy service providers, the availability of electronic billing information and bills and the provision of information to customers with the bill. The paper outlines proposals for changes to supplier licence conditions where needed. The consultaton closes on 24 February 2014. (13 January 2014)

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Energy Policy

Policy Exchange: Going, going, gone – The role of auctions and competition in renewable electricity support: this report argues that renewable subsidies, especially for offshore wind, should be cut if they fail to come down in cost under strict time limits, and it urges the Government to hold the offshore wind industry to claims it can reduce its costs significantly by the end of the decade. The report says that plans to introduce auctioning to enable all technologies to compete on a level playing field should be brought forward. Currently, technology-specific auctions are set to be introduced under the Electricity Market Reform from 2018 at the earliest for projects commissioning after 2020. It argues that auctioning for mature technologies, in which different forms of renewables bid against each other for state support, should be introduced as early as next year for projects commissioning in 2017. It also recommends that the Government shouldseek to abolish the EU Renewable Energy Target which imposes unnecessary costs on attempts to decarbonise. (16 December 2013)

DECC: More interconnection – Improving energy security and lowering bills: this statement recognises the potential that interconnection has to contribute to our energy policy objectives. It sets out the Government’s views on further interconnection and makes proposals for improving how Britain identifies interconnection opportunities and assesses the impacts of proposed projects. It also points to relevant initiatives, such as the work underway by Ofgem to clarify the regulatory models that will be available for future interconnectors. (17 December 2013)

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Environment Agency: Enforcement and sanctions guidance: sets out how the Agency makesenforcement decisions, the types of tools available to it and associated processes. it  includes its variable monetary penalty methodology and information on enforcement undertakings. (7 January 2014)

Environment Agency: Enforcement and sanctions statement: explains the Agency's position on enforcement. It supersedes the Enforcement and Prosecution Policy, issued July 2008, to include the application of civil sanctions and an outcome-focused approach to enforcement. (7 January 2014) 

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Green Deal

DECC: Green Deal assessment survey wave 3 – Summary report: presents headline findings from the latest research on consumer reaction to the Green Deal Wave Three. Households who had had a Green Deal Assessment were asked about the experience and what they had done and planned to do since having the assessment. It shows that 81% of these households intend to or have already had at least one recommended measure installed. (16 December 2013)

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Health and Safety

HSE: Dangerous Substances and Explosive Atmospheres Regulations 2002. Approved Code of Practice and guidance: this Approved Code of Practice (ACOP) and guidance consolidates five pieces of health and safety guidance to help employers more quickly and easily understand how to protect their workers from dangerous substances and explosive atmospheres. It provide practical advice on how to comply with the Dangerous Substances and Explosive Atmospheres Regulations 2002 (DSEAR) that require the elimination or reduction of risk of fire and explosion from substances connected with work activities. (9 December 2013)

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Environment Agency: Guidance for run-of-river hydropower development: guidance for designers and developers of hydropower schemes, explaining how the Agency regulates hydropower, the environmental issues to consider, advice on how to design a scheme, and how to apply for the necessary permits and licences. There is also a glossary of technical terms. (31 December 2013)
The Environment Agency has also issued guidance on specific aspects of hydropower development.

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Cabinet Office: Procurement Policy Note – New threshold levels for 2014: this PPN sets out the finalised threshold values to apply from 1 January 2014 to 31 December 2015. It also provides a summary of all the changes to threshold levels for public contracts, utilities contracts and defence and security contracts from January 2014. The levels are slightly lower than the 2012 figures, because of fluctuations in exchange rates. From 1 January 2014, the thresholds are:

  • local authority supplies and services contracts - £172,514
  • central Government and NHS supplies and services contracts - £111,676
  • utilities supplies and services contracts - £345,028
  • works contracts (all bodies and sectors) - £4,322,012.

(16 December 2013)
See Bevan Brittan's alert: New procurement thresholds from 1 January 2014.

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Shale Gas

DECC: Consultation on the Environmental Report for further onshore oil and gas licensing: seeks views on an Environmental Report on DECC's proposals for further onshore oil and gas licensing in areas of Great Britain, as part of the strategic environmental assessment process. The report, produced by AMEC, sets out the potential economic and environmental effects of further oil and gas activity in Great Britain, including shale oil and gas production, comparing a ‘low activity’ and ‘high activity’ scenario. It identifies, describes and evaluates the likely significant effects on the environment of DECC’s proposals to invite applications for, and issue new licences for onshore oil and gas exploration and production, and of reasonable alternatives to that plan; and how these effects can be reduced or offset. The consultation closes on 17 March 2014. (17 December 2013)

DECC: Regulatory roadmap – Onshore oil and gas exploration in the UK regulation and best practice: this roadmap provides a basic, indicative overview of the permitting and permissions process for exploratory work in onshore oil and gas development in the UK, focusing on shale gas and coal bed methane developments. It highlights key pieces of legislation and regulation, and identifies required actions and best practices at various stages. There is a separate roadmap document for each of the UK jurisdictions, reflecting the different legislative frameworks that apply and various regulatory bodies that have responsibility for operations in each geographical area. (17 December 2013)

Prime Minister's Office: Local councils to receive millions in business rates from shale gas developments: the Prime Minister has announced that local authorities will be able to keep 100% of business rates they collect from shale gas sites, double the current 50% figure – worth up to £1.7m a year for a typical site. It will be directly funded by central government. Community benefits for local people will also be strengthened: local communities will receive £100,000 when a test well is fracked, and a further 1% of revenues if shale gas is discovered. This could be worth £5m to £10m for a typical producing site over its lifetime. The industry will consult on how this money can best be shared with the local community, with options including direct cash payments to people living near the site, plus the setting up of local funds directly managed by local communities. (13 January 2014)
For more details of what this could mean for local authorities and local communities, see our Alert: Shale Gas – an opportunity for local authorities and their communities?

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Smart Meters

DECC: Consultation on the regulatory arrangements for enrolment and adoption of Foundation Meters: seeks views on the appropriate regulatory and governance framework to govern projects to develop or procure systems or services under which the DCC will enrol and operate SMETS 1 meters installed during the Foundation stage on behalf of suppliers. It sets out proposals for a number of key elements of that framework. The consultation will help inform the content of the second stage of the Smart Energy Code, which governs the management of Smart Metering in Great Britain. It closes on 30 January 2014. (16 December 2013) 

DECC: Smart Metering Implementation Programme – Government response and further consultation: provisions in the Smart Energy Code concerning financing of communications hubs and consequential changes to the DCC Licence: provides the Government’s conclusions on one of the issues discussed in the October 2013 consultation on the Smart Energy Code (SEC), namely the proposed provisions in the SEC to support the delivery of cost-effective, viable and sustainable third party financing for communications hubs. The Government has concluded that these provisions are a proportionate and appropriate mechanism for helping to secure the most cost-effective financing for an initial 5% of the expected total number of communications hubs. However, as a result of information received during that consultation a further consequential consultation is needed on changes to the DCC licence to support these provisions. The closing date for the new consultation is 20 January 2014. (16 December 2013)

DECC: Second annual progress report on the roll-out of Smart Meters: provides an explanation of smart metering and its benefits. The report describes the work that is being undertaken by the Government, energy suppliers and other stakeholders during the Foundation Stage of the roll-out and in particular the progress that has been made during 2013, to prepare for the period between Autumn 2015 and 2020 when most consumers will receive smart meters. (17 December 2013)

DECC: Smart Metering Implementation Programme – Summary plan: updated implementation timeline for the Government's programme to replace 53m meters with smart electricity and gas meters in all domestic properties, and smart or advanced meters in smaller non-domestic sites. (18 December 2013)

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