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Energy Bill Update - November 2012

On Thursday 29 November 2012, The Secretary of State for Energy and Climate Change announced the publication of a revised draft of the Energy Bill. The Bill which is to establish a legislative regime for delivering secure, affordable and low carbon energy, follows extensive consultation and pre-legislative scrutiny of proposals published in May 2012.

The reform package has undergone significant development since May with some well publicised disagreements between DECC and the Treasury.  However, it seems that Government has listened to many (but not all) concerns raised by industry and the House of Commons' Committee on Energy and Climate Change in their report of 23 July 2012.  Thus for example, it is proposed that Energy Intensive industries will be exempted from any additional costs arising Contracts for Differences.

The package of reforms is probably the most significant development in the UK's energy market since privatisation in 1989. The documentation published today provides a welcome level of detail on parts of the package and includes a 74 page Heads of Terms for the proposed Contracts for Differences. The revised Bill also introduces a number of new measures such as around access to markets and consumer redress powers although proposals to reflect the Prime Minister's recent announcement on energy tariffs remain to be published. 

While the level of detail provided by DECC is helpful, a number of significant pieces remain with much to be done over the next 12 months to fill in detail of the reform proposals.  It also remains to be seen how the proposals of the Gas Strategy published alongside the Chancellor's Autumn Statement will work with the EMR package – while Ministers profess that the two are designed to be compatible, this remains to be seen. 

We have published an in-depth analysis by our specialist electricity, renewable and nuclear teams on the revised draft of the Energy Bill designed to highlight the important changes as they affect your business. This is broken down into sections as they relate to DECC's announcement, namely:

  1. Electricity (Electricity Market Reform), incorporating:
  2. Strategy and Policy Statement
  3. Nuclear Regulation
  4. Government Pipe-line and Storage system
  5. Offshore Transmission
  6. Exemptions For Energy Intensive Industries
  7. Liquidity
  8. Fees in respect of Nuclear Decommissioning

Our aim is to keep you up to date on the situation as it progresses, and help interpret the impact of the legislation on your organisation.

If you would like to arrange a meeting to discuss how the changes could impact you, please do not hesitate to get in touch with your usual Pinsent Masons contact, or alternatively e-mail us simon.hobday@pinsentmasons.com