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New Energy Bill to avoid ‘Energy Crunch’

On Tuesday May 22nd 2012, the Secretary of State for Energy and Climate Change announced in a written ministerial statement, the publication of a draft Energy Bill. The Energy and Climate Change Select Committe have announced an inquiry to scrutinse it and has issued a call for written evidence.


The Government has insisted that the bill is not a ‘blank cheque’ for nuclear, rejecting claims that the proposals will push up the price of household electricity bills and the amount of public subsidy. Without the measures, the Government feels that the UK is facing an ‘energy crunch’ over the next decade, with around 25% of exisiting generating capacity due to go off-line.The Bill will establish a leglislative framework for delivering secure, affordable and low carbon energy and includes provisions on the following:√جª¬ø

Electricity Market Reform [EMR]

This bill puts in place measures to attract the £110 billion investment which is needed to replace current generating capacity and upgrade the grid by 2020, and to cope with a rising demand for electricity.

This includes provisions for: 

  • Contracts for Difference – long-term instruments to provide stable and predictable incentives for companies to invest in low-carbon generation;
  • Investment Instruments – long-term instruments to enable early investment in advance of the CfD regime coming into force
  • ;Capacity Market – to ensure the security of electricity supply;
  • Conflicts of Interest and Contingency Arrangements – to ensure the institution which will deliver these schemes is fit for purpose;
  • Renewables Transitional – transition arrangements for investments under the renewables obligation scheme, and
  • Emissions Performance Standard – to limit carbon dioxide emissions from new fossil fuel power stations.

The bill follows the 2011 white paper ‘ Planning our electric future: a White Paper for secure, affordable and low- electricity’ that set out key measures to attract investment, reduce the impact on consumer bills and create a secure mix of electricity sources including gas, new nuclear, renewables and carbon capture and storage [CCS].

Key elements of the reform package include

  • .A Carbon Price Floor to reduce investor uncertainty.
  • The introducion of new long term contracts ( Feed in Tariff with contracts for difference)
  • Emissions Performance Standard [EPS] set at 450gCo2/kWh to reinforce the requirement that no new coal fired power stations are built without CCSA Capacity Mechanism, including demand response as well as generation to ensure future energy supplies.

Click here to download the executive summary of the white paper.


In addition to EMR, the Energy Bill will also improve regulatory certainty by ensuring that Government and Ofgem are aligned at a strategic level through a Strategy and Policy Statement (SPS), as recommended in the Ofgem Review of July 2011.


The Bill places the interim Office for Nuclear Regulation (ONR) on a statutory footing as the body to regulate the safety and security of the next generation of nuclear power plants. This includes setting out the ONR’s purposes, regulations and functions.


The Bill includes provisions to enable the sale of the Government Pipe-line and Storage System (GPSS). This includes providing for the rights of the Secretary of State in relation to the GPSS, registration of those rights, compensation in respect of the creation of new rights or their exercise, and for transferral of ownership, as well as powers to dissolve the Oil and Pipelines Agency by order.


A minor measure to provide an exception to the prohibition of participating in the transmission of electricity during testing in the commissioning period of Offshore Transmission connections constructed by or on behalf of developers also constructing an offshore generating station.

Originally posted 2012-05-23 00:00:00.

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