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Energy Act 2013-14

Royal Assent

Summary

  • Bill status:

    Bill is now an Act

  • Type of Bill:

    Government Bill

Sponsors:

Last event

  • Royal Assent Royal Assent

    18 Dec 2013

    The Bill gained royal assent to become the Energy Act 2013.

Summary

A Bill introduced by the Government to make provision for the reform of the electricity market in order to encourage the generation of low carbon electricity.  The Bill aims to establish a secure mix of electricity sources, mitigate rising consumer bills, and attract some of the £200 billion of investment in UK electricity generation OFGEM estimates is required by 2020.

The Bill was confirmed in the Queen's speech on 9 May 2012, and following the publication of a draft Bill prepared for pre-legislative scrutiny on 22 May 2012, the Energy Bill was introduced to Parliament and published on the 29 November 2012.

The Bill will allow for:

• new long-term contracts to provide stability for non-fossil fuel electricity generators. Under these 'contract for difference' feed-in tariffs, generators will receive a payment if the wholesale electricity price drops below a set figure, and will pay a tariff if the price rises above that figure. Investment instruments will allow early investment before these contracts come into force

• the introduction of an emissions performance standard (EPS), which will set an absolute annual emissions limit of 450g CO2/kWh for new fossil fuelled power stations. This is designed to encourage investment in new gas plants in the short term, and the establishment of new coal-powered stations with carbon capture and storage (CCS) capability in the future.

• the creation of an Office for Nuclear Regulation, an independent, industry financed statutory regulator

• the sale of the Government Pipeline and Storage System (GPSS), an asset of the Ministry of Defence

• the introduction of a Strategy and Policy Statement, setting out the the government's policies, responsibilities and regulatory aims for the energy sector

• a capacity mechanism to be introduced, to ensure sufficient power reserves are built up for the future. This will comprise demand reduction measures and the development of new reserves

• transitional arrangements to come into force to account for the closure of the Renewables Obligation to new generation in April 2017

DECC's technical update on EMR, published on 15 December 2011, clarified this last measure. The government determined to introduce a capacity market, in which the level of diverse capacity required to meet peak demand will be contracted through a central auction, with incentives offered to providers to ensure demand can always be met.

The update also revealed the government's view that the System Operator, part of the National Grid, can best deliver 'contract for difference' feed-in tariffs, and included details on project investment and Renewable Obligation Certificates.

Caroline Flint described the measures as a "missed opportunity" for failing to impose a decarbonisation target by 2030 on the Bill and stated that Labour would work with members across the House to get this target on the Bill.

On 23 July 2012, the Energy and Climate Change Committee published its report on the draft Bill. The committee reported that HM Treasury had intervened to ensure that the new long-term energy contracts would not be guaranteed by the state, but would instead spread the liability across various energy providers. The committee concluded that these plans were too complex and possibly not legally enforceable, and urged the government to reconsider. Chair Tim Yeo said that "the government is in danger of botching its plans to boost clean energy."

Friends of the Earth has criticised the Bill for not including a target to decarbonise the power sector, describing the Government as "jeopardising green jobs and industry and undermining efforts to tackle energy insecurity and climate change."

Greenpeace has also criticised the Energy Bill for not introducing a 2030 decarbonisation target and has warned that without a target, there is a "serious risk of an investment vacuum" after 2020.

The Nuclear Industry Association welcomed the Bill and the "investment certainty" that it would bring through the introduction of a major nuclear new build programme.

Should the Bill become an Act, parts of the Bill will extend to the United Kingdom.

In the Energy Bill's first day at committee stage, most of the debate focussed on decarbonisation, and whether the government were correct in the way they had gone about setting a decarbonisation target in the Bill. An amendment tabled by Lord Oxburgh to put a date for a target in the Bill was withdrawn. Discussions were also had on fuel poverty and carbon capture and storage. Government amendments extending the decarbonisation provisions to Northern Ireland were passed. In the second day in grand committee, the debate focussed on the new Office for Nuclear Regulation, and its role and functions within wider nuclear policy. The opposition tabled a number of amendments on the scope and role of the ONR, but none were agreed or pushed to a vote. The government also passed a number of technical amendments.

In the third day's debate of the Energy Bill in the House of Lords grand committee, discussion focussed on the government's plans to change the way domestic energy tariffs were administered and the sale of the government's pipeline and storage system. No amendments were agreed, and none were pushed to a vote. The government did however agree to look further into the proposal to bind a future government to provide an annual energy statement to Parliament. During the fourth day of committee, discussion on the Bill looked mostly at consumer issues, such as fuel poverty, consumer redress and smart metering. Government amendments on fuel poverty and a limited extension of the feed-in tariff scheme were agreed. However, no opposition amendments were agreed or pushed to a vote.

In its fifth day of consideration in grand committee, discussions on the Energy Bill looked at a number of different areas including gas capacity, geothermal energy, EPS regulation including the grandfathering of gas plants and carbon capture and storage. The sustainability of biomass was also raised as were concerns about the applicability of EPS to existing plants. No amendments were agreed or pressed to a vote. During the seventh day of committee, an amendment seeking to see payments under capacity agreements started within six months after the national system operator has run a capacity auction was withdrawn after the government argued in favour of its four year schedule.  A specific amendment calling for a strategy to address the policy barriers to interconnection and the distortions introduced by the proposed capacity market was also withdrawn after government assurances.

In its final day of committee stage, discussions on the Energy Bill ranged from final investment decision enabling contracts, energy storage, and research and development around nuclear power. A number of technical government amendments were agreed, but no other amendments were agreed or push to a vote. The Bill was reported with amendments.

In the first day of report stage, the House of Lords narrowly voted against including a clean power decarbonisation target in the Energy Bill.

The government argued that setting a specific target in 2014 was not in the best interests of consumers and that it was far better to wait until after the general election to take a more "measured" approach.

During the second day of report stage of the Energy Bill, the government was defeated on an amendment limiting future coal use and high carbon emissions in electricity generation.

A number of government amendments were also added to the Bill on power purchase agreements, clarifying their use. Other discussions were on nuclear safety, power generation and landfill.

The Energy Bill faced its third day in report stage on 6 November 2013 where, despite assurances from the government, an amendment on fuel poverty was rejected after being pushed to a division. Environmental safeguards were also debated with the amendments tabled withdrawn following the government's reassurances.  Amendments 97 to 100 tabled by Liberal Democrat peer Lord Roper on measures requiring suppliers to inform customers of the cheapest available tariff were accepted by the government.  Other amendments focussed on carbon monoxide detection, transparency on consumer bills and block tariff pricing.  The Bill was passed to the third reading.

The third reading took place on 13 November 2013. After a short debate, the Bill was read for the third time, passed and returned to the Commons with amendments.

The Commons ping-pong stage was held on 4 December 2013. The government defeated an amendment that would bring existing coal fired power plants under Emissions Performance Standard (EPS). Liberal Democrat and Labour peers joined forced last month to insert a new clause into the Bill that would require existing coal fired power plants to also comply with the EPS.

However, when the amendment went back to the House of Commons yesterday to be considered by MPs, they rejected it, voting 318 to 236 against the change. Three Lib Dem MPs rebelled against the government; Martin Horwood, Julian Huppert and Roger Williams. Government amendments to the Bill which had been inserted in the Lords on a variety of issues were all agreed.

Despite a division, amendments on limiting coal fired generation were defeated in the House of Lords on 11 December 2013.

On 18 December 2013, the Bill gained royal assent to become the Energy Act 2013.