Examination of the Infrastructure Bill in the Lords Committee in July included a number of probing amendments to the 'Community Electricity Right' (CER) provisions. While, none of the tabled amendments were agreed, the debate on these is instructive on the Government's current position.

The Government again stated that the legislative provisions are a potential backstop power if the  voluntary approach is not successful. A consultation on the draft Framework for the voluntary  approach by the Shared Ownership Task Force (endnote 1), began on 24 June and ends on Friday 29  August. The final Framework was due to be published in September, but is now due to be published in  October the Government Minister indicated. The Infrastructure Bill is likely to proceed to the  House of Commons for first and second reading in November.

This note highlights and summarises the issues debated. You will find our full briefing on the  proposed provisions here.

Scope of the 'Community Electricity Right'

The first proposed amendment sought to extend the scope of the CER to include all electricity  generation facilities. This was clearly intended to explore whether it is appropriate to single out renewables.

The Government responded that while it strongly supports community engagement in relation to the  development of all energy projects, the current provisions should apply only to renewable  electricity generation facilities. A number of reasons were cited. The measure is part of the  Government's broader approach for increasing community investment in renewables, as set out in the  Community Energy Strategy. This policy was developed specifically to tackle the imbalance between  national and local benefits that characterise renewable schemes. The Government referred to  experience in the UK and abroad which had shown that a financial stake in a local development often  translates into less opposition and a quicker and cheaper development process.

Baroness Verma on behalf of the Government stated: "The Government are clear that the powers would  apply in the first instance to those onshore renewable technologies that currently form part of the  voluntary process, and only if the voluntary process is not successful."

Offshore technologies

A further amendment raised the question of offshore technologies within the provisions. The  Government confirmed that "There is scope within these provisions to include offshore renewable projects" and "it is our [the Government's] intention that this  [inclusion of offshore technologies] would be on a longer timescale, which would provide us  [Government] with the flexibility to include these technologies further down the line without  needing new primary legislation."

An assurance was given that any extension of the provisions to other technologies would be subject  to a formal consultation and would be informed by experiences drawn from other technologies as well  as the views of relevant stakeholders.

Excepting certain facilities

An amendment was tabled to elicit more information on the provisions for certain renewable  electricity facilities, defined as excepted facilities, to be exempt from the community electricity  right regulations.

The Government's view was that it was important for the Secretary of State to retain flexibility to  specify that certain facilities may be excluded from any future regulations. This is to ensure that  where renewable electricity generators are already providing a community stake or other form of  benefit to the community in a way that is specified in regulations as an acceptable alternative,  they are not also required to comply with the regulations.

The Government confirmed that it wished to exclude facilities wholly owned by the community. It  confirmed that it was also considering exempting facilities where generators may be offering  innovative approaches to shared ownership; e.g. generators offering certain revenue- sharing  arrangements to local residents that are passed on in the form of electricity bill discounts and  which are in addition to any community benefit payments.

It also confirmed that it was considering exempting generators not taking part in statutory energy  schemes, such as feed-in tariffs, contracts for difference or the renewables obligation, as there  might be a higher risk profile for community investors in such projects.

Eligibility criteria

The Government explained that eligibility criteria determining who may exercise the right to buy  would be subject to formal consultation and subsequently set out in secondary legislation. It  confirmed that age (over 18 years) was likely to be one of the criteria. The 5% cap

The Government also provided more information on its intention concerning the proposed 5% cap to be  set in legislation. It confirmed that the 5% would provide the upper limit on the size of stake the  industry may be required to offer communities.

It also stated that the actual amount to be set in secondary legislation could vary by technology.  The reasons being that the scope of the powers would cover a greater than 10 fold range in project  size. Consequently a 5% mandatory offer might be appropriate for smaller schemes with lower capital  costs. However, for schemes with a higher capital cost it might be more realistic to set a lower  limit, "for example 1% of project capital costs".

The 'Backstop power'

A voluntary approach was the Government's stated preference, but at the same time it confirmed that  it would set up a broad and flexible enabling framework for a 'community right to buy in'.

Exercise of the backstop power, the Government confirmed, would be subject to affirmative  resolution procedures and would therefore require the consent of both houses.

It stated that it felt the policy on the whole created the right impetus and drive to achieve the  Government's aim to substantially increase shared ownership from 2015. The potential for the  back-stop powers to be implemented is "intended to nudge industry to ensure that the voluntary  process is sufficiently robust". Scotland Electricity generation is a reserved matter and consequently the right could be made to apply in  Scotland without a legislative consent motion being required. The UK Government confirmed it was in  discussions with the Scottish Government.

Note that the Scottish Government consultation on its Community Energy Policy Statement was  published on19 August 2014. It seeks views on the ambitions and support mechanisms for Scottish  community energy, including proposals for community ownership and shared ownership. The  consultation closes on 10 November 2014.

Timetable for implementation

Currently the commencement provisions provide that it is open to the Secretary of State to  implement the back-stop power 2 months after the coming into force of the Act.

The timeframe for the implementation of the new Act stretches into the next Parliament. This could mean that a new Government could implement the power  regardless of the current assurances.

The Infrastructure Bill's Committee Stage is set to continue on 14 October, but The Lords Report  stage is yet to be scheduled. The bill is likely to proceed to the House of Commons for first and  second reading in November.

The Shared Ownership Task Force was due to publish in September, but the Government Minister  indicated in debate that it is now due to be published in October.

Comment

While the debate is instructive on the Government's position a number issues remain on which it  would no doubt be helpful to the industry to receive further clarity. For example, could the CER apply to extensions over 5MW to existing facilities, would the additional 5MW make the entire facility qualify for the CER or  just the extension?

While the Government reiterated that it favoured the voluntary process, it also made it very clear  that the introduction of legislative backstop powers "also sends a very clear signal that we want  to see offers to communities being made on the ground from 2015."

In the context of the upper limit on the size of stake that the industry might be required to offer  communities it is interesting to note that the Scottish draft Community Energy Policy Statement  (endnote 2), gives the example of investment up to 49% equity in forthcoming wind and hydro  projects on the national forestry estate (land managed by Forestry Commission Scotland). It remains  to be seen if communities could ever participate at this level.

If the Taskforce report is published in September it would enable the Committee debate, when it  resumes, to take its findings into consideration. However, if the report is only published in  October then it is possible that debate on the bill will have moved beyond the relevant bill provisions.