- 1 Switching
- 2 Who Really Makes UK Energy Policy?
- 3 Renewables
- 4 Smart Meters
- 5 Energy Bills
- 6 Emissions
- 7 Electricity
- 8 Oil
- 9 Gas
- 10 Nuclear Power
- 11 Coal
- 12 Water
- 13 Articles
- 14 References
- UK Energy Policy, https://www.carbonbrief.org/category/policy/uk-policy
- International Policy, https://www.carbonbrief.org/category/policy/international-policy
- Category:Energy >> Energy + Energy in the United Kingdom + Energy policy of the United Kingdom
- Energy Review (UK 2006), https://www.sourcewatch.org/index.php/Energy_Review_(UK_2006)
- Renewable Technologies, https://www.r-e-a.net/renewable-technologies
- Great pic by Matt Wuerker here
The fundamental problem underlying the UK Energy Market is that the aim of policy makers is to turn homo sapiens into homo economicus. Instead of using behavioural economics insights to reform economics, economists have tried to reform people. Switching has become an obsession – but only of policy makers; customers aren't interested. The obvious answer is to reorient behavioural economics to reforming economics rather than reforming customers. Perfect competition is only to be found in economics textbooks, but that is what the CC/CMA use to determine benchmarks and guide policy. Remedy: rewrite the textbooks and retrain the economists. ref?
- The Govt's overall energy policy is guided by the Large Combustion Plant Directive which introduced more stringent emission limits that will lead to the closing of a number of old, less efficient coal and oil-fuelled power stations. ref
Who Really Makes UK Energy Policy?
- Nov.09.2018: Moscow gas deal is threat to Europe, Merkel told. Angela Merkel has been accused of pursuing a “Germany First” policy through her dogged support of the controversial Nord Stream 2 gas pipelines from Russia. The €9.5bn project, which would leave Berlin dependent on the Kremlin for up to 50% of its natural gas imports, is opposed by most of Germany’s neighbours and allies, including Britain, the US, Poland and the Baltic states. Oliver Moody, The Times.
- Oct.16.2018: This government does not practise what it preaches on fossil fuels. Last March, UK Export Finance — a govt body that promotes exports abroad — offered up to £1bn of support to help companies secure business in Argentina. Then trade minister Greg Hands claimed the credit would support the Argentinian renewable energy sector. more Barry Gardiner, The Times.
- Jun.15.2018: What if Canada had spent $200bn on wind energy instead of oil? In explaining Canada's decision to nationalise the controversial Trans Mountain pipeline for $4.5bn, Bill Morneau went hard on the economic argument. “Make no mistake,” the finance minister said. “This is an investment in Canada’s future.” Since 1999, more than $200bn has been invested into the Alberta oil sands for that future. But what if that cash had gone into wind energy instead? Let’s compare. Wind comes out miles ahead. So begs the Q why govts insist on funding fossil fuels. Stephen Leahy, The Guardian.
- May.16.2018: One of the govt’s flagship policies has suffered a ‘dramatic collapse’. The Environmental Audit Committee has said govt policy changes have caused a “dramatic… collapse” in investment; one which threatens to derail legally binding clean energy and climate change targets. The report notes that the latest figures for low-carbon energy investment show that there has been a ‘dramatic and worrying collapse’ since 2015 that threatens the UK’s ability to meet its carbon budgets. In cash terms, investment in clean energy fell by 10% in 2016 and 56% in 2017. Annual investment in clean energy is now at its lowest since 2008. The govt’s Clean Growth Strategy does not do nearly enough to meet legally binding climate change targets, even if all its policies are delivered in full. “The privatisation of the Green Investment Bank” and changes due to Brexit “may also have played a part in the fall in investment. Ministers should find new ways to support councils to mobilise investment in low carbon projects. The falling cost of generating electricity from wind and solar power means that we can now secure clean energy capacity at lower prices, which may have cushioned the impact of the fall in cash investment”. The committee says that the “collapse in clean energy investment” was also due to the following specific policy changes in 2015 ... more Linkback: Mary Creagh Steve Topple, The Canary.
- Jan.26.2017: Mapped: How Fracking Lobbyists From the UK and America Have Infiltrated Parliament. Companies directly involved in the shale gas industry donated around £130,000 in funds or benefits in kind to the All-Party Parliamentary Group on Unconventional Oil and Gas in 2016. Matt Hope, DeSmog UK. See also How Fracking Special Interests Infiltrate the UK Parliament.
- Apr.15.2013: EDF’s abuse of power. EDF main revenue stream comes from generating electricity through nuclear power. FoI requests by Caroline Lucas in 2011 revealed that EDF, alongside other companies such as npower and Centrica, had ~50 employees working within the govt on energy issues over a 4-year period, including drafting energy policy. Ewa Jasiewicz, Red Pepper.
- Dec.05.2011: Energy companies have lent more than 50 staff to government departments. 50+ employees of companies including EDF Energy, npower and Centrica have been placed within govt to work on energy issues in the past 4 years. The staff are provided free of charge and work within the departments for secondments for ~2 years. There have been 195 meetings between Department of Energy and Climate Change and the Energy Industry between GE-2010 and Mar.2011. Since Oct.2008, DECC has hosted 36 people from business or consultancies, including EDF Energy, Centrica (parent company to British Gas), oil company ConocoPhillips, lobby group the UK Petroleum Industry Association and Energy Solutions, a US nuclear waste treatment company. Consultancies with major energy practices also supplied expertise, including KPMG and Ernst & Young. DEFRA has taken in 13 staff who work in the energy business, including Shell, and Horizon Nuclear Power, a joint venture of E.ON and RWE npower that aims to build nuclear power stations in the UK. Caroline Lucas said "Companies such as the Big Six energy firms do not lend their staff to govt for nothing – they expect a certain degree of influence, insider knowledge and preferential treatment in return". None of the staff work for renewable energy companies or NGOs. Damian Carrington, The Guardian.
- FixMe: Coal + other Fossil Fuels should not be in here. Neither should CO2 and climate change issues.
- Energy policy of the United Kingdom § Energy policy history
- See also The nine green policies killed off by the Tory govt, Jul.2015
|2020||The Paris Agreement comes into effect (UNFCCC, Article 3). The objective is to keep global temperature rise this century well below 2°C. Each country determines, plans and regularly reports the contribution it should make in order to mitigate global warming. See Paris Agreement|
|Jan.2019||Onshore Wind Subsidy Ban: energy minister Claire Perry turned a deaf ear to pleas by industry and the National Infrastructure Commission for the govt to remove the ban against onshore windfarms competing for subsidies; ~800 renewable projects stood ready to plug the power gap left by Hitachi's abandonment of the Wylfa nuclear project. Govt’s figures show onshore wind is the cheapest source of new electricity generation. Business secretary Greg Clark admitted that renewable energy is more competitively priced than nuclear. Always party before country. ref|
|Nov.2017||Onshore Wind Subsidy Ban: The Welsh govt called on the Westminster govt to enable the lowest cost technologies, eg. wind and solar. Energy minister Claire Perry said "I think onshore wind is absolutely part of the future".|
|Oct.2017||Onshore Wind Subsidy Ban: A report from the Energy and Climate Intelligence Unit found that allowing the de facto onshore wind ban to remain in place and unremedied will cost £1bn over the next 4-5 years relative to other technologies. ref The policies led to a 94% decline in onshore wind planning applications since their introduction in 2015.|
|Sept.2017||Coal: Govt response to Coal Consultation of Nov.2015: the appropriate means to guarantee the closure of unabated coal by 2025 will be to set a new emissions intensity limit of 450g CO2 per kWh of electricity generated, which is broadly the emissions intensity of an unabated gas generator.|
|The Energy Company Obligation (ECO2t) replaced ECO2, running until Sept.2018|
|Nov.2015||Coal: Govt announced a Consultation on when to close coal-fired power stations that are not able to capture and store their emissions. The Consultation started in Nov.2016.|
|Jul.2015||The Green Deal was scrapped as "it had failed to deliver its objectives". This caused concern, as there was no replacement scheme. Then Energy minister Greg Barker stated he was "very relaxed", and that he was confident the private sector would pick up the slack from the withdrawal of govt funding.|
|Onshore Wind Subsidy Ban: The govt announced the closure of the Renewables Obligation to new onshore wind power projects from Apr.2016, ie. one year early.ref Cameron's campaign had promised to "end any new public subsidy for them and change the law so that local people have the final say on windfarm applications". Energy Secretary Amber Rudd said "We've got enough wind energy". Communities Secretary Greg Clark declared that onshore wind developments would only take place in areas designated by Local Authorities as suitable in "Local or Neighbourhood Plans", and have the backing of the local community. ref  Scottish Energy Minister Fergus Ewing MSP said "Onshore wind is already the lowest cost of all low carbon options, as well the vital contribution it makes towards tackling climate change, which means it should be the last one to be scrapped, curtailed or restricted". He was ignored. Greenpeace UK said that ministers have just raised energy bills by blocking the cheapest form of clean power, whilst continuing to back the impossibly expensive Hinkley C and going 'all out' for unpopular, risky, and unproven fracking. They were also ignored.|
|Apr.2015||The Energy Company Obligation (ECO2) replaced ECO1.|
|Oct.2014||CfDs: The first allocation round opened, with budgets of: Pot 1 (established technologies): £50m for projects commissioning in 2015/16, rising to £65 million from 2016/17 onwards; Pot 2 (less established technologies): £155m for projects commissioning in 2016/17, rising to £235m from 2017/18 onwards; and Pot 3 (biomass conversions): £0; no CfDs will be awarded to biomass conversion schemes in the 1st allocation round.|
|Jun.2014||The Green Deal was re-launched, but this time as grants rather than loans. A Green Deal Home Improvement Fund was added to try to improve takeup; households were eligible to claim up to £7,600 for home improvements. The Fund closed in Sept.2014, due to overwhelming demand.|
|Apr.2014||The Renewable Heat Incentive (domestic) scheme was launched.|
|Dec.2013||Electricity Market Reform: EMR introduced two mechanisms to provide incentives for investment: #Contracts for Difference (CfDs) and the #Capacity Market (CM). CFDs provide long-term price stabilisation; the CM provides a regular retainer payment to reliable forms of capacity (both demand and supply side), in return for such capacity being available when the system is tight. The Energy Act 2013 brought in EMR, which co-existed with ROs until 2017, which it then replaced. See also "EMR Reform will attract £110bn need to replace and upgrade the electricity infrastrucutre". ref|
|Apr.2013||The Energy Company Obligation (ECO1) was launched. This placed obligations on the Big Six (British Gas, EDF, E.ON, npower, Scottish Power and SSE) to help low-income households, people living in older properties and low-income communities by providing cash to help them insulate and better heat their homes.|
|Oct.2012|| The Green Deal scheme was launched. This was a govt-backed loan from the Green Deal Finance Company to households to finance energy-efficient home improvements. Repayment was made through electricity bill payments, with the "golden rule" that the loan repayments should never exceed the savings you made on your energy bills. The Green Deal Finance Company interest rates ranged from 7.9%–10.3% APR; there was a one-off loan fee of £63, plus an annual finance charge of £20 per loan. A "Green Deal Advisor" had to inspect and report on the property, at a cost of £150 or more. Unsurprisingly, the take-up was minimal, whilst the criticism was maximal.|
The govt's choice of Gemserv as the certification body was heavily criticised, because (a) it was paid £5.8m per year; and (b) it was owned by the 6 biggest energy companies. (Energy Act 2011) See also The Green Deal: Criticism
|Feb.2012||Wind: 100+ MPs (1 DUP, 2 Labour, 2 LibDems, 101 Cons) wrote an open letter to David Cameron, urging him to halt onshore wind. The signatories included notable climate science deniers Jacob Rees-Mogg, Sammy Wilson, as well as 2 of only 5 MPs that voted against the Climate Change Act in 2008, Phillip Davies and Christopher Chope.ref|
|Nov.2011||The Renewable Heat Incentive (non-domestic) scheme was launched.|
|Apr.2010||The Feed-in Tariff (FIT) scheme started, supporting anaerobic digestion, onshore wind, hydro and solar PV projects up to 5MW in capacity, and small-scale fossil-fuel CHP.|
|Govt policy: UK energy security, https://www.gov.uk/government/publications/2010-to-2015-government-policy-uk-energy-security/2010-to-2015-government-policy-uk-energy-security#appendix-5-electricity-market-reform-emr|
|Apr.2009||The Energy Act 2008 enabled the "banding" of the Renewables Obligation to allow it to bring on a wider range of technologies, such as offshore wind and biomass. Banding removed the link between the amount of electricity generated and the number of Renewables Obligation Certificates (ROCs) received per Megawatt Hour (MWh). Early stage technologies would now receive more than 1 ROC/MWh ("banding up"), to assist in entering the marketplace. In short, support varied depending on the cost of the technology. Additionally, RO would have to operate alongside #Feed-In Tariffs and the #Renewable Heat Incentive.|
|The Climate Change Act 2008 (Gov.uk) introduced a legally binding target to reduce GHG emissions to 80% below base year by 2050, with 5-year GHG budgets. The Committee on Climate Change was set up to advise the govt on setting and meeting carbon budgets, and to monitor progress.|
ToDo: Energy Review.
|Feb.2005||The Kyoto Protocol came into effect (UNFCCC, Article 2). It puts the obligation to reduce GHGEs onto developed countries, on the basis that they are historically responsible for the current levels of GHGs in the atmosphere. See Kyoto Protocol|
|Jul.2004||The Energy Act 2004 created the Nuclear_Decommissioning_Authority, and the Civil Nuclear Constabulary (to protect nuclear sites and materials). It amended the Sustainable Energy Act 2003 to define "renewable energy" as: clean coal technology; coal mine methane; biomass; biofuels; fuel cells; photovoltaics; wave and tidal generation; hydrogeneration; microgeneration; geothermal sources; and "other sources and technologies" which would cut carbon emissions. It also allowed energy firms to discharge their Renewables Obligation by payment of money.|
|Oct.2003||The Sustainable Energy Act 2003 required annual progress and impact reports. It also required a strategy for improving the energy efficiency of residential accommodation; and sidelined the role of nuclear energy in future planning.|
|Feb.2003||Low Carbon Economy: The govt's White Paper established a formal energy policy, and committed to working towards CO2 reduction by 2050, via "business opportunities". The Paper failed to address any specific methodologies of achieving the reduction. It also specifically avoided proposals for new nuclear power stations.|
|Renewables Obligation: The RO replaced the NFFO. It encouraged generation of electricity from eligible renewable sources by placing an obligation on electricity suppliers to buy an increasing proportion of electricity from renewable sources. The RO would remain open to new generators until Mar.2017; electricity generation accredited under the RO would receive its full lifetime of 20 years. The scheme would close in 2037.|
|Mar.1994||The United Nations Framework Convention on Climate Change came into effect. The objective is to "stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system". However, the UNFCCC only outlines how future agreements can be negotiated to achieve objectives. It sets non-binding limits on GHGEs for individual countries and contains no enforcement mechanisms. Parties are committed to develop, publish and regularly update national emission inventories of greenhouse gases (GHGs). See UNFCCC|
|Non-Fossil Fuel Obligation (NFFO): Electricity Distribution Network Operators were required to purchase electricity from the nuclear power and renewable energy sectors. The NFFO generated a trading surplus, which the govt siphoned off, instead of using it to support the renewable energy sector.|
|Govt policy was one of market liberalisation linked to the privatisation of state-controlled energy companies and the dismantling of the Department of Energy. As a consequence, govt no longer had the ability to directly control the energy markets. Regulation is now carried out through the Office of Gas & Electricity Markets (OfGem), while energy policy is largely limited to influencing the operation of the market via taxation (eg. North Sea Oil Tax), subsidies (eg. the Renewables Obligation), incentives, planning controls, underwriting of liabilities (eg. those carried by the Nuclear Decommissioning Authority), grants, and research funding.|
- Renewables Obligation (United Kingdom) - See the section on "Banding of the Renewables Obligation".
Electricity Market Reform
Contracts for Difference
- Contract for difference: Contract for difference, a contract between two parties, "buyer" and "seller", stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time. If the difference is negative, then the buyer pays instead to the seller.
- Jan.15.2018: Contracts for Difference 2nd Allocation Round, https://www.gov.uk/government/publications/contracts-for-difference-2nd-allocation-round-supply-chain-plans-for-projects-over-300mw-which-secured-contracts-2017
Contracts for Difference (CfDs) are the renewable power support mechanism to replace the RO, although they are also available for nuclear and carbon capture and storage projects.
Most other support policies give a fixed income to renewable generators, but leave them free to sell the power itself on commercial terms. But if market prices go up, then the generator's total income will be higher than expected and they may be over-rewarded – and therefore the impact on consumer bills will be higher than it should be. By the same token, falling power prices would see generator income and consumer bills being lower than expected.
CfDs seek to address this by setting a fixed figure for the total income for a project – ie. both the renewables support and the value of the electricity. This total figure is called the "strike price". Government will also take a market average for the power price, known as the "reference price". Rather than being a fixed price, the subsidy paid to the generator will be the difference between the strike price and the reference price. In theory, this gives the best of both worlds, as the generator has certainty over total income and the subsidy – and therefore the impact on consumers - is no higher than necessary. Link
Renewable Heat Incentive
- https://www.r-e-a.net/renewable-technologies, https://www.gov.uk/non-domestic-renewable-heat-incentive, https://www.ofgem.gov.uk/environmental-programmes/non-domestic-rhi, https://www.gov.uk/domestic-renewable-heat-incentive, https://www.ofgem.gov.uk/environmental-programmes/domestic-rhi
The RHI builds on a similar approach to the Feed-In Tariff, although is available at all scales. Unlike electricity, excess heat generation cannot simply be exported onto a grid, so the policy aims to ensure that only useful heat is supported. Unlike the renewable electricity policies - which are funded by consumer bills - the RHI is paid for out of generation taxation. The budget of £1.15bn is fixed to the end of Mar.2020/21.
Non-Domestic: Opened in Nov.2011, supporting biomass, solar thermal, water source heat pumps, ground source heat pumps, biogas, air source heat pumps, biomass CHP, deep geothermal, and injection of biomethane to the gas grid.
Domestic: Launched in Apr.2014, open to single domestic installations. To date, the non-domestic scheme has been dominated by biomass boilers and biomethane, and the domestic by air source heat pumps and biomass boilers.
- May.03.2018: Government Failed to Consider Economic Impacts of Policies that Led to Huge Decline in Onshore Wind. The govt did not assess the economic or environmental impacts of a policy change that led to a huge decline in onshore wind developments. The inevitable collapse in onshore wind energy production had a huge impact on jobs in the renewable energy sector and is regarded as a missed opportunity to reduce energy sector emissions. The policy effectively halted the progress of an industry supported by over 75% of the British public. In mid 2015, Communities Secretary Greg Clark declared that onshore wind developments would only take place in areas designated by local authorities as suitable in ‘Local or Neighbourhood Plans’, and have the backing of the local community. more Christine Ottery, DeSmog UK.
- Oct.28.2015: Renewable energy and the politics of subsidies. Energy minister Andrea Leadsom’s assertion that “I don’t think anyone here would advocate an industry that only survives because of a subsidy paid by the billpayer, BUT: according to the IMF, the UK will spend approximately £26bn on fossil fuel subsidies this year. By comparison, DECC figures show the cost of supporting renewables in 2014-15 was £3.5bn, to rise to £4.3bn in 2015-16. Put another way, every UK citizen pays £412 in fossil fuel subsidies, and just £55 for renewables. Letters, Gwen Harrison, Scientists for Global Responsibility, The Guardian. See also Good money after bad oil: the intergenerational burden of public subsidies to North Sea oil & gas.
See Smart DCC Ltd and Smart Energy GB. See here, here, and here re balancing.
The govt made a serious miscalculation when deciding how to persuade millions of consumers to have smart meters installed. The real reason behind the concept is that smart meters are a fundamental part of a Smart Grid, and would enable real-time feedback so operators can make load-balancing decisions. This is particularly important wrt renewables.
Instead, the govt condescended to, and patronised, people by trying to appeal to their wallets. "Just think, you could save £5 per year on boiling your kettle" is the line they are taking. This approach tells us two things: (a) the govt genuinely believes that citizens are idiots, and selfish to boot; and (b) it is unable to tell the truth. Who wouldn't want to help a push towards making renewables work?
- Nov.23.2018: Smart meters rollout labelled a 'fiasco' as consumers face extra £500m bill. National Audit Office says that with 39m meters still to be replaced, govt has no chance of hitting 2020 deadline. The NAO also noted that Capita's Smart DCC Ltd firm had already incurred costs of £329m, 69% higher than expected. Adam Vaughan, The Guardian.
"This year, next year, sometime, never."
- National Grid plc, https://www.reuters.com/finance/stocks/NG.L/key-developments
- Dec.31.2018: Millions to see annual energy bills drop as price cap takes effect. The long-awaited ceiling on default tariffs amounts to the biggest shakeup of the energy market since privatisation, but experts have warned that the saving will be wiped out within months. The cap is a ceiling that can move up and down twice a year depending on the costs facing energy firms. Companies are adopting a range of strategies to adapt to the regulated prices. Some, such as British Gas and E.ON, are pursuing cost-cutting programmes and shedding jobs. British Gas owner Centrica has launched a legal challenge against OfGem’s calculations for the cap. The big suppliers have also been busily moving customers off default tariffs on to fixed deals instead, which are not covered by the cap. Consumer groups have warned people not to assume that fixed tariffs provide better value, after one analysis found 70 fixed deals that would exceed the cap. Adam Vaughan, The Guardian.
- Centrica to challenge Ofgem price cap. Centrica, owner of British Gas, is to bring a legal challenge against OfGem, accusing it of setting the energy price cap too low, costing Britain’s biggest supplier £70m.
Centrica reported operating profits of £1.25bn in 2017. Emily Gosden, The Times.
- Dec.19.2018: Ofgem to slash profits of energy networks. OfGem has published proposals to slash the profits of companies that run gas pipelines and power cables by even more than expected. National Grid said it was “disappointed”. The companies that run the gas and electricity network get their revenues from levies charged on households’ and businesses’ energy bills, and these charges account for about £250 on a typical annual household bill. OfGem said the new plans would save households £30 a year from 2021, and added it would set the “cost of equity”, which is how much network companies can pay their investors, at roughly half the level of that used for the current eight-year price control. It is also switching from the retail prices index (RPI) to the consumer prices index including housing (CPIH) measure of inflation. The Energy Networks Association claimed the proposals could “jeopardise the innovation and investment that is critical” to delivering upgrades to the grid. Emily Gosden, The Times.
- Jul.30.2018: Tougher set of price controls move a step closer. OfGem.
|Sept.2018||OfGem chief Dermot Nolan produced a respectable fudge, as he was told to. Parliament gave him the tricky job of setting an energy price cap at a level that prevents “rip-off” pricing but still encourages customers to switch suppliers, goals that pull in opposite directions. The price cap, then, is a command to companies to shed costs, meaning jobs. Last year 17% of customers moved. If that rate falls, this supposedly temporary exercise will be a flop. Price caps may just produce a different sort of muddle that satisfies nobody – certainly not customers who followed the sound advice to pay attention and shop around.|
|Aug.2018||Energy price cap for vulnerable customers raised by OfGem, which blamed wholesale energy costs driven by higher oil prices. The raise follows another increase of £57 a year only 6 months ago. British Gas currently charges £1,161 a year, only £25 more than the vulnerable customers cap. The other 5 large suppliers are charging an average of £1,213 a year, £77 a year higher than the new level of the vulnerable customers cap.|
|May.2018||npower became the 5th of the Big Six energy suppliers to raise prices. About 1m customers on the firm’s standard variable tariff will be hit by a 5.3% (~£64), increase per year from Jun.17. The increase is on par with those announced by British Gas and Scottish Power, but npower’s standard tariff was already the most expensive by a big supplier. In March, E.ON quietly removed discounts, increasing bills by up to £50. SSE is the only one of the Big Six not to have announced a price increase.|
|Apr.2018||Centrica-owned British Gas raised its prices by an average of 5.5%. Other energy firms followed suit over the next few months. Energy minister Claire Perry said: "We are disappointed... govt is introducing a new price cap by this winter to guarantee that consumers are protected from poor value tariffs and further bring down the £1.4bn a year consumers have been overpaying the Big Six. Switching suppliers will always help consumers get the best deal".|
|Mar.2018||The market will provide. BEIS declined to open an inquiry into the UK's gas storage requirements. The Gas Industry had been calling for a review since the "Rough" site, which provided 70% of the UK's storage capacity (about 2 weeks), was closed in Nov.2017, due to age and bad condition. Centrica said it had become too costly to maintain. The UK now has about 4–5 days of winter demand storage. Stag Energy, a power generation and infrastructure company, announced its plans to build an £800m underground gas storage site in the Irish Sea, connected to Britain's gas market.|
|Feb.2018||The Domestic Gas and Electricity (Tariff Cap) Bill will allow OfGem to limit electricity and gas tariffs until 2020, when it will recommend whether it should be extended on an annual basis up to 2023. The Bill applies to those on a SVT, around 11 million households. (+ check this article')|
|Oct.2017||Theresa May rejected Penrose's "relative" price cap, supported by 80 MPs. She announced the introduction of legislation to compel OfGem to introduce a strict limit for each region on the amount that companies can charge households for each unit of energy they use, and an "absolute" cap.|
|Oct.2017||OfGem promised to extend its price cap for customers using pre-payment meters to include 1m socially vulnerable households, from Feb.2018. It also introduced new rules for suppliers to roll customers coming to the end of a fixed-rate deal onto a similar tariff, rather than onto an expensive SVT. Greg Clark said OfGem's move was neither far nor fast enough, and he would bring forward legislation to compel suppliers to behave. John Penrose agreed, but advocated a "relative" price cap. Energy suppliers said "the market may well correct itself", with more customers switching away from STVs; British Gas said STVs should be scrapped completely rather than impose price caps. Energy UK warned of the risk of halting competition growth.|
|Sept.2017||Centrica's British Gas raised electricity prices by 12.5%, blaming green levies, govt policies and smart meters, but OfGem calculated energy costs had fallen by 6%. Centrica announced operating profits of £816m for the last 6 months.|
Earlier this year, EDF Energy, SSE, E.On, npower and Scottish Power all raised their prices...
|Sept.2017||“Parliamentary pressure mounts” – 1/3 MPs letter. – “Business secretary Greg Clark has given the energy regulator OfGem a final warning to eradicate £1.4bn of “excessive” annual charges by power companies” (FT)|
|Sept.2017||“If Ofgem don't have the guts to use their powers to go into battle on behalf of consumers, they should be replaced by a regulator which isn't scared to do its job.” John Penrose MP|
|Jun.2017||Energy cap pledge junked. Greg Clark confirmed that only 2.6m poorer families who qualify for the "Warm Home Discount" would be helped – not the 17m promised on the campaign trail.|
|Jun.2017||Sec of State asks OfGem what action it will take – Ofgem: extend price cap to vulnerable customers in 2018|
|Apr.2017||OfGem introduced an energy price cap for 4m households with pre-payments meters, after the Competition & Markets Authority found that they were more likely to be vulnerable and were getting especially bad deals.|
|May.2017||The Energy Market is clearly not working: energy bills have risen by 158% over the last 15 years.|
pledge to limit the standard tariffs paid by 7 out of 10 families, and that OfGem would be given powers to set maximum prices, making it harder for energy firms to punish loyal customers. Greg Clark confirmed the price cap, "families are paying £1.4bn more than they should". When challenged by Labour, Mrs May said she could not promise the cap would prevent prices from rising annually.
Subsequently, May was forced to deny having stolen the energy bill cap idea from Ed Miliband's "Marxist universe", as David Cameron termed it.
|Apr.2017||OfGem introduced an energy price cap for customers with a prepayment meter. The cap is temporary until 2020, when the smart meter rollout is due to be completed. It is one of the CMA's remedies resulting from its two-year investigation of the energy market.|
|Apr.2017||SSE plc increased bills by 6.9%, £73 per year, blaming rising costs for the 'difficult' decision. A month later, it announced pre-profits of £1.8bn, up from £593m in 2015/16.|
|Apr.2017||PM calls election, cites £1.4bn detriment, proposes cap on SVTs to curb “rip-off energy tariffs”. Election manifestos propose stronger action than CMA.|
|Mar.2017||Parliament All-Party motion calls for more action|
|Feb/Mar.2017||price increases by most large suppliers|
|Sec of State says £1.4bn customer detriment “huge”, are CMA measures sufficient?|
|The CMA's report, started in Jun.2014, was published. It found that, between 2004–2014, domestic electricity prices rose by around 75%, and domestic gas prices by around 125%. In 2015, the upwards trend halted, with electricity prices roughly flat and gas prices falling nearly 5% in real terms. A wide regional price variation was noted; the CMA seemed mystified as to why customers did not switch and save. The STV was around 11% higher for electricity, and 15% higher for gas, than other tariffs. Average EBIT margins for electricity were around 2.5%/7% for households/SMEs, and 4.5%/10% for gas. Although the CMA did not find the Big Six earned excessive profits, it did conclude that consumers were contributing to profits of £1.4bn per year (£2bn in 2015) via standard variable tariffs (SVTs).|
CMA Final Report: Four of Ofgem’s five identified issues not a problem. Ofgem’s Simple Tariffs policy had an Adverse Effect on Competition (AEC) – remedy was Ofgem remove it. “Weak customer response” AEC - gave suppliers market power, exploited via level of prices & price discrimination – Customer detriment average £1.4bn pa, £2bn in 2015. Remedies for weak customer response AEC. Promote greater customer engagement, including DisengagedCustomerDatabase. Price cap for PrePayment Meter customers (16% of total). Minority report: extend price cap to Standard Variable Tariff (SVT) customers (about 70% of total)
|Feb.2015||Electricity Market Reform: Contracts for Difference, https://www.gov.uk/government/collections/electricity-market-reform-contracts-for-difference. A Contract for Difference (CFD) is a private law contract between a low carbon electricity generator and the Low Carbon Contracts Company (LCCC), a government-owned company. A generator party to a CFD is paid the difference between the ‘strike price’ – a price for electricity reflecting the cost of investing in a particular low carbon technology – and the ‘reference price’– a measure of the average market price for electricity in the GB market. It gives greater certainty and stability of revenues to electricity generators by reducing their exposure to volatile wholesale prices, whilst protecting consumers from paying for higher support costs when electricity prices are high. ... https://www.gov.uk/government/collections/electricity-market-reform-contracts-for-difference|
|Jan.2015||Ovo Energy cut its gas bills by around 10.4%; the Big Six managed 4% on average. This is the 11th time Ovo cut prices over the past 18 months. Wholesale gas prices fell by 28% over the last year.|
|Jun.2014||GEMA asked the CMA to investigate the energy market. Its remit was to determine whether "any feature, or combination of features, of each relevant market prevents, restricts or distorts competition in connection with the supply or acquisition of any goods or services".|
|Nov.2013||Energy prices rose at up to 8 x the rate of earnings between 2010–2013. Analysis from Citizens Advice showed that the Big Six had increased their prices by 37% since Oct.2010; during the same period, average earnings rose by 4.4%.|
|Oct.2013||The energy companies were called in front of the Energy and Climate Change Committee (ECCC) to justify recent price rises. Ovo Energy said that wholesale gas had actually got cheaper: "the most expensive price we've paid in the last 4 years was in May.2011, and since then it's been cheaper". This was in direct contradict of the Big Six's assertions that international global prices of gas and electricity had consistently risen.|
|Sept.2013||Ed Miliband pledged to impose a 20-month price freeze on all energy companies if Labour won GE-2015. He was savaged by the Organisation for Economic Co-operation and Development (OECD).|
|2013||Enterprise & Regulatory Reform Act – 2013, 2015 Govt Steer to CMA to reinforce aims|
|Dec.2012||OfGem approved proposals by energy companies to upgrade and maintain the gas and electricity grid between 2013-2021. £24.5bn will go towards modernisation, and £15.5bn for upgrades. OfGem reduced the original figure by 16%, to reduce the impact on utility bills. The National Grid, which makes 60% of its operating profit from electricity and gas transmission, said the figure was too low. A study in Nov.2011 by the Energy Networks Association found that the power grid will need up to £1.6bn pounds in investment per year to cope with the integration of renewable power capacity such as wind farms.|
|2012||2012 Simple Tariffs (max 4, most discounts banned). But there were still concerns.|
|Jul.2011||White Paper, Planning our electric future: a white paper for secure, affordable and low-carbon energy, https://www.gov.uk/government/publications/planning-our-electric-future-a-white-paper-for-secure-affordable-and-low-carbon-energy|
|Coalition Govt Policy: "more proactive and consumer-focused interventions; merge OFT+CC+CMA "to play leading role in achieving over-arching objectives & delivering desired outcomes”, – Joint working between CMA & sector regulators|
|Jul.2008||Sel Cttee: “OfGem will need to demonstrate rather greater sense of urgency than has been made apparent so far”|
|Feb.2008||Ofgem Probe “to address mounting concern among customers”. Few customers engaged, “unfair price differentials” 20 measures to promote more engagement Especially non-discrimination condition SLC 25A. But these measures didn’t seem to work.|
|Feb.2008||Sel Committee announces investigation.|
|At the start of 2008 OfGem insisted the market was working – before launching an investigation and finding £500m overcharging. “Market is sound, Ofgem assures Chancellor”|
|2006||Energy Review, Energy Review Implementation.|
|2004||The UK moved from being a net exporter of gas to a net importer.|
|2002||OfGem ceded its last price controls, when it concluded that the market was working fine.|
|Dec.2000||The Utilities Act 2000 brought the Gas and Electricity Markets Authority (GEMA) and the Gas and Electricity Consumer Council (GECC) into being. It required integrated electricity companies to have separate licenses for each of their businesses, ie. supply or distribution.|
|1998 transitional price cap, removed 2002|
Apr.23.2017: May promises to cap energy bills Jul.03.2017: May promises to cap energy bills Oct.09.2017: May promises to cap energy bills Feb.26.2018: May promises to cap energy bills, "Today, we are introducing legislation to cap energy prices and cut bills for millions of families helping them make ends meet." https://twitter.com/Conservatives/status/968066356968132608 Apr.10.2018: Energy bills to rise by 5.5% Rather good pics of Daily Mail, Labour vs. Tories, https://twitter.com/IdleRich2/status/968560763320373252, https://twitter.com/smtm_LFC/status/968208328110362624 Capping utility bills was a key policy in Labour’s 2015 general election manifesto, but was rubbished by David Cameron as evidence that Ed Miliband wanted to live in a “Marxist universe”, https://twitter.com/SteMurphy18/status/968140115292884992 >> https://www.theguardian.com/money/2017/apr/23/tory-energy-bill-cap-will-save-families-100-damian-green-says
- IsMyBillFair, ismybillfair.com is a registered trademark of Nineteen21 Ltd (No. 10640637). The site is the brainchild of Alex Perrin, a former Virgin Media commercial & pricing director, and 3 other senior figures from within the industry. Price comparison website. See also People-powered price website could save you hundreds of pounds a year (Mar.2018)
- National Energy Action is the national charity working to end fuel poverty in England, Wales and Northern Ireland. It supports the APPG on Fuel Poverty & Energy Efficiency by providing its secretariat.
- Nov.20.2018: Hydrogen gas plan for millions of homes. Almost four million homes across northern England could be converted to use hydrogen gas for heating and cooking by 2034 under a £23 bn scheme to tackle climate change. Boilers and gas cookers would need to be replaced or converted under the plan. Decarbonising heating, which accounts for about 30 per cent of carbon emissions in Britain, is one of the biggest energy challenges facing the government. Options include switching to hydrogen gas, which produces only heat and water when burnt; installing electric-powered “heat pumps” or setting up local heat networks that send hot water to homes from a central renewable source. The report, by Northern Gas Networks, Cadent and Equinor, proposes building a series of facilities to convert natural gas into hydrogen and carbon dioxide. The waste carbon dioxide would then be pumped or shipped out to the North Sea and injected into saline aquifers in the seabed for permanent disposal. The govt has already committed £25m to funding projects to demonstrate that appliances can be run on it safely. Emily Gosden, The Times.
FixMe: This needs to be combined with Privatisation Policy#Electricity. To go through:
- Post-war electricity market
- Electricity Act 1957
- The CEGB Story
- British Electricity Trading and Transmission Arrangements, p.171
- http://watt-logic.com/2017/11/19/sse-npower-merger/ (v. informative)
- Bath Industry Briefs > Gillian Simmonds (2002)
- See also this treasure trove, http://www.bath.ac.uk/management/cri/publications/industry_briefs.html
|Electricity Act 1989 ref ...|
1917 - 1957
After WWII, the parties seemed to have come to a consensus on the fundamentals of running the country. The "mixed economy", balanced between public and private ownership, was cherished. Pragmatism was the order of the day, with union leaders enjoying beer and sandwiches at No 10. Economic policy was forged through achieving "tripartite consensus" between employers, unions and the govt.
The Winter of Discontent (1978-1979) sounded the death knell for that way of doing things. Thatcher arrived in power armed with the free-market philosophy of Milton Friedman, Ronald Reagan's adviser. A new style of politics was born.
|Central Electricity Generating Board and Electricity Council were established to introduce greater decentralisation, under the Electricity Act 1957 (the CEA ceased to exist). The CEGB owned and operated the transmission system and the generating stations in England and Wales, and was responsible for the bulk supply of electricity to the 12 area boards; its duties included planning the provision of new generation and transmission capacity. The Area Boards were given greater autonomy, particularly for financial matters. The Electricity Council exercised a co-ordinating role on matters of industry-wide concern. The Council also had certain specific duties, including offering advice to the govt, and promoting and assisting the Area Boards to maintain and develop an efficient, co-ordinated and economical system of electricity supply.|
|Central Electricity Authority: the BEA was replaced by the CEA for England and Wales by the Electricity Reorganisation (Scotland) Act 1954. At the same time, the two South of Scotland Area Boards and the associated electricity generation and distribution plant were merged into the South of Scotland Electricity Board to form an integrated electricity board responsible for generation, distribution and electricity supply in southern and central Scotland.|
|British Electricity Authority: The BEA was established as the central electricity authority under the nationalisation of Great Britain's electricity supply industry. It took over the operations of ~560 small supply power companies, municipal authority electricity departments, and the Central Electricity Board (which ceased to exist). The BEA comprised a central authority with 14 Area Boards, whose remit was to acquire bulk supplies of electricity from the central authority and to distribute electricity economically and efficiently to users.|
|1935-1938||The National Grid was largely completed by the end of 1935. By 1938 the proportion of spare generating plant had been reduced from 80% to ~15%, and the resulting capital saving was ~75% of the cost of building the Grid; generation costs fell by 24%.|
|Central Electricity Board: The CEB was established by the Electricity (Supply) Act 1926, to build and operate the National Grid, and control but not own the power stations. The objective was to standardise the UK's electricity supply, and lower the costs to citizens. The Act also gave the Electricity Commissioners the powers they needed to be effective regulators.|
|1919||Electricity Commissioners: The Electricity (Supply) Act 1919 established the 5 Electricity Commissioners as regulators. Opposition in the House of Lords meant that the Electricity Commissioners had very little power, so very few improvements could be made.|
Liberals (Lloyd George)
|The Board of Trade was planning the reconstruction of the nation's industries post WWI. It set up a Committee chaired by Sir Archibald Williamson, which proposed nationalising the electricity industry. The "Williamson Report" stated that the very diverse nature of electricity production (there were ~600 electrical power generators in the UK) resulted in the costs to the customer being much greater than would be the case if larger interconnected units were used.|
- Feb.14.2019: Oil firm aims to extend Dorset coast drilling despite marine life risk. Corallian Energy, a privately-owned E+P company (CH), is drilling off the Dorset coastline. The company was limited to drilling in winter to mitigate environmental concerns; however, it has asked OPRED to expand its licence terms. If significant oil is confirmed it will be extracted via horizontal long-reach drilling via Wytch farm, at Poole harbour, Europe’s biggest onshore oil facility. The rig was approved after an application for a windfarm off the coast was turned down on grounds it would harm the views from designated Areas of Outstanding Natural Beauty and England’s only natural Unesco World Heritage Site, the Jurassic Coast. Sandra Laville, The Guardian.
- Jan.21.2020: Legal bid to stop UK building Europe's biggest gas power plant fails. Drax Group plc's plan has been approved, despite environmental objections and criticism over climate leadership. In 2019 the Planning Inspectorate recommended that ministers refuse permission; but Andrea Leadsom ignored them and gave the go-ahead in Oct.2019. ClientEarth's legal challenge was rejected by the High Court. Damon Carrington, The Guardian.
Gas Storage: UK gas storage capacity restrictions (2015), DDG DDG, Bacton Gas Terminal § Baird and Deborah gas storage
History of the Gas Industry, https://web.archive.org/web/20160831061342/http://www.gasarchive.org/ / https://extranet.nationalgrid.com/GasArchive/
Consumer Reporesentation: Gas Consumers' Councils, House of Commons Debate, Feb.15.1973, Vol.850, cc 1611-22, link On appointment of Chairmen to Consumers' Councils; "knowing a Minister or even a Member of Parliament could help if such an appointment were required". Nowhere was it suggested in the evidence given to the Select Committee on Nationalised Industries that a good qualification for the chairmanship of a gas consumers' council was a knowledge of and interest in consumer protection and presumably in the gas industry itself.
See also: Map of Gas Infrastructure (2013)
- Jul.19.2017: The coal truth: how a major energy source lost its power in Britain. In Feb, ministers re-established the Nuclear Industry Council, an industry-govt group, to support their ambition of a fleet of new reactors. Adam Vaughan, The Guardian.
- Mar.23.2018: Minister cites climate change in rejection of opencast coal mine. Sajid Javid says environmental impact of Northumberland plan outweighs economic benefits. Adam Vaughan, The Guardian.
- Feb.02.2018: Yorkshire coal plant to close with loss of 130 jobs. Eggborough’s failure to get capacity market contract proved final straw for power station. Adam Vaughan, The Guardian.
- Jan.05.2018: UK government spells out plan to shut down coal plants. Govt unveils phase-out plan, with one of eight remaining power stations to stop generating electricity this year. Three plants shut in 2016, and most are expected to halt operations by 2022, the last ones standing will be forced to close in Oct.2025 because of new pollution standards. However, the plan reveals the sector will continue to be propped up by hundreds of millions of pounds in backup power subsidies for several years, paid through consumer energy bills. Adam Vaughan, The Guardian.
- Jul.19.2017: The coal truth: how a major energy source lost its power in Britain. Coal supplied just 2% of power in the first half of 2017, marking a steep decline from just 5 years ago, according to analysis by Imperial College. Ministers are disbanding the "Coal Forum", the govt and industry body created to secure the long-term future of coal power and mining, in the latest sign of the dirty fuel’s rapid demise (map of coal plants). After the closure in 2015 of the UK’s last big deep mine, Kellingley colliery in Yorkshire, there are now just 3 underground and 7 surface operations. Colombia now provides most of the UK's coal imports. Adam Vaughan, The Guardian.
- 1997: The newly-elected Labour govt placed restrictions on the number of gas-fired power stations that could be built.
- Jan.1990: Roosecote Power Station marked the start of the "Dash for Gas" which saw many CCGTs built, as gas became an alternative to coal power, which hastened the demise of Britain's coal industry.
- The so-called “Dash for Gas” and a decision to move away from coal mining was for entirely ideological reasons as the then Tory govt sought to destroy the powerful mining unions; left the Drax coal plant out of sync with the times. The owners of the now-privatised Drax plant decided to do something. They announced that they planned to turn over at least half the plant to be co-fired on biomass. Drax's conversion has drastically altered the energy landscape of the UK. So large is its demand for biomass fuel, the UK now imports large quantities of wood and wood wastes from the USA. 82% of the UK’s imports and 60% of all of America’s wood fuel exports now goes to powering Drax. ref, Sept.2015
- In the decade after the miners' strike of 1985, 200,000+ jobs were lost as a result of coal privatisation, as well as creating the largest British industrial conflict of modern times. Note these job losses were not to do with closing the mines, but the entry of private firms. ref
The Department of Energy funded research into wave energy between 1974—1983 under its Wave Energy Programme. The programme’s goals were to assess the feasibility and cost of energy of wave-generated electricity for the Grid. Several device teams were funded, including the Edinburgh Wave Power Project which developed the Edinburgh Duck. There were also thematic projects called Technical Advisory Groups. The themes were resource, structural loading, mooring and anchoring, generation and transmission, and environmental impact.ref
- Nov.15.2018: UK's backup power subsidies are illegal, European court rules. The UK’s scheme for ensuring power supplies during the winter months has been suspended after a ruling by the European Court of Justice that it constitutes illegal state aid. The scheme subsidises owners of coal, gas and other power stations so the plants are ready to ensure that electricity for businesses and homes is available at peak times in winter. The UK has also been blocked from holding any capacity market auctions for energy firms to bid for new contracts to supply backup power in the future. National Grid said ministers had instructed it to indefinitely postpone auctions that had been planned for early 2019. Tempus Energy, which started the challenge in 2014, said: “This ruling should ultimately force the govt to design an energy system that reduces bills by incentivising and empowering customers to use electricity in the most cost-effective way – while maximising the use of climate-friendly renewables.” The winter of 2017/18 was the first year the capacity market was in effect, with companies due to receive £990m for 2018/19. The scheme works by energy companies bidding years in advance for billpayer-funded subsidies to provide backup power at crunch times during winter. Alan Whitehead, shadow energy minister, said: “This judgment effectively annuls previous state aid permission to provide subsidies for existing fossil fuel power plants. I have long criticised this bizarre arrangement, which simply throws money at old dirty power stations.” Clark said the govt was already in contact with the European Commission and seeking state aid approval, so the capacity market could be reinstated. Adam Vaughan, The Guardian.