Yesterday the Energy and Climate Change Committee (the ECCC) published a highly critical report following its pre-legislative scrutiny of the Government's draft Energy Bill.
Alongside the report Tim Yeo, Chairman of the ECCC, issued a frank warning to the Government in an article published in the Financial Times,
"We believe it is still possible to make the Government's energy policy work. If DECC and the Treasury do not fix these problems before the energy bill is debated in the autumn, my committee will seek to amend it in Parliament. The legislation is too important for Britain's electricity industry and for the wider economy to mess up."
Electricity industry participants should consider the ECCC's report, its potential impact on the Government's electricity market reform (EMR) proposals and implementation timetable, and ensure they keep track of any formal response issued by the Government.
Key criticisms and recommendations of the ECCC
The ECCC's report (available here) contains the Committee's detailed criticisms from its condensed pre-legislative scrutiny of the draft Energy Bill (our briefing on the draft Bill is available here).
The Committee's 51 recommendations are distributed throughout the report but are also listed on pages 64 to 71 for ease of reference.
The summary to the report sets out the Committee's headline criticisms of the draft Energy Bill and recommendations, which include:
Click here to view table.
Concerns over the relationship between DECC and the Treasury
The report implies that the ECCC fears that conflict between DECC and the Treasury could hamper the Government's proposals, stating:
"The perceived conflict between DECC and HM Treasury on some aspects of EMR is also contributing to uncertainty among the investor community. We sincerely hope that these two departments can in future develop a better working relationship than they have demonstrated to us during the course of our inquiry. We hope that all departments will present a clear, consistent and united message as the Bill passes through the House."
Investors awaiting the results of the Renewable Obligation Banding Review will sympathise; it has been reported that disagreement between DECC and the Treasury regarding the level of support for offshore wind has delayed the announcement of the results (which were expected last week). Our briefing on the proposals that were included in DECC's Banding Review consultation is available here.
The Government currently plans to introduce the Energy Bill to Parliament in autumn. It is clear from the ECCC's report that DECC has a substantial amount of work to do if its EMR timetable is to remain on schedule.
Electricity sector participants should follow developments, and any formal response to the ECCC's report, closely.