Energy Bill Announced in Queen's Speech

Environmental issues were once again in the news last week as the Government’s legislative agenda was revealed in the Queen’s Speech on 9 May. The speech confirmed that the Government’s latest low-carbon energy proposals, contained in the Energy Bill, will be considered in this Parliament. The announcement that the Government “will propose reform of the electricity market to deliver secure, clean and affordable electricity and ensure prices are fair” dispelled fears that the Bill would be sidelined to make way for House of Lords reform.

A press release from the Department for Energy and Climate Change stated that the Energy Bill would “reform the electricity market to enable large-scale investment in low-carbon generation capacity in the UK and deliver security of supply, in a costs-effective way.”

The key elements in the Bill include the introduction of:

(1) a system of low-carbon generation revenue support to provide more certainty of revenues for low-carbon generation and make investment in clean energy more attractive. The Feed-in Tariff with Contracts for Difference (FiT-CfD)) would give operators of nuclear plant and renewables guaranteed long-term prices for their output;

(2) an Emissions Performance Standard to provide a backstop to prevent the construct of new coal plants which emit more than 450g/kWh;

(3) a Strategy and Policy Statement setting out:
- the Government’s strategic priorities for the energy sector;
- the role and responsibilities of bodies who implement or are affected by energy policy; and
- the outcomes which are to be achieved by the regulator and the Secretary of State when regulating the energy sector.

(4) a capacity mechanism to ensure security of supply so that there is sufficient reliable and diverse capacity to meet demand; and

(5) the Office for Nuclear Regulation.

Whilst the broad objectives of the Bill have generally been well received, detailed comment will have to await the publication of the draft Bill. This was expected to be published on 22 May, but that date is no longer confirmed. The Bill is expected to pass into law at some time in 2013.