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UK energy policy: May-be, May-be not

The Government recently set out its legislative agenda for the next two years in the Queen’s Speech. With an enfeebled mandate after shockingly losing their parliamentary majority huge swathes of the Conservatives’ manifesto were watered down or culled altogether. Within this turmoil is there any clarity on the future direction of the UK’s energy policy?

Definitely May-be

Two bills will be brought forward.

The Smart Meter Bill “extends the Government’s ability to make changes to smart meter regulations by five years (to 2023), making sure the rollout is delivered effectively”. Large suppliers, responsible for meter installations, were hoping for an extension to the implementation timetable after pointing to mounting cost, safety and delivery pressures under the current plan. This does not appear to be the intent at this time. Instead the Government can continue to support the remaining elements of the rollout such as providing insurance for smart meter infrastructure or modifying the Smart Energy Code.

The Automated and Electric Vehicles Bill allows “the Government to require the installation of charge points at motorway service areas and large fuel retailers, and to require a set of common technical and operational standards”. This offers clarity to some previous funding commitments, and positively supports the rapid adoption of mass market models.

May-be, May-be not

While the government will “bring forward measures to help tackle unfair practices in the energy market to help reduce energy bills” it unsubtly scaled back its two main pledges to tackle affordability.

Publishing a Green Paper examining various industries and markets which are not working fairly for consumers is a long way removed from the promises of an independent review into the Cost of Energy. In this bundled form, it’s hard to imagine this being anywhere near as comprehensive as the Competition and Markets Authority’s two year energy market investigation. It’s questionable what, if any, value such a review would add.

The promise to cap energy prices was left out altogether. This clearly remains a contentious policy within the Conservative party. The pledge to safeguard 17 million households looks like it is falling short as an extension of the prepayment meters price cap to the 2.6 million vulnerable customers who receive the warm home discount if manoeuvres between the Secretary of State and Ofgem are any indication.

There may be reasonable explanations for these omissions. Their inclusion would have complicated the overriding priority of passing the Queen’s Speech, avoiding the risk of further weakening the Prime Minister’s hand. Their absence doesn’t prohibit introduction at a later stage. Further, these policies may not require new legislation to be brought forward. The Government already has the power to review the Cost of Energy or any other market, and it may be possible to extend the price cap applied to customers on prepayment meters under existing powers.

The future direction of the UK’s energy policy is no clearer following the Queen’s Speech. Crucially, the publication of the Clean Growth Plan, which will set out Government proposals to meet its future carbon budgets agreed under the Climate Change Act, looks delayed further until the autumn. When available this should provide long-awaited and urgently needed clarity on the future plans and priorities pledged in their manifesto. With Brexit uncertainty looming, any prolonged policy indecisiveness could derail the Government’s affordability and low carbon objectives. 

Back to July 2017

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