Welcome to our newsletter with a special feature in this issue on the Draft Energy Bill.

Introduction
After much deliberation and consternation, the Government finally published its draft Energy Bill in May and this week the spotlight on the Bill returned when the Commons Energy & Climate Change Select Committee grilled the Big 6. The hearings, and the ones to follow over the next month, show that there is still a great deal of work to be done before the Bill starts its passage through Parliament.

It's clear that that there are still a number of questions hanging over the Bill and a worrying lack of clarity in key areas.

In this newsletter, we provide an overview of the draft Energy Bill, the next steps with it and some of the reactions to it. If you are interested in receiving regular updates on the progress of the draft Bill, please register on our website or contact us via email mike@taylorkeogh.com or via phone 020 3170 8465.

If you would like any additional information or to comment on any of the featured stories, we would be very pleased to hear from you. Our contact details are below. Paul Taylor, Managing Director

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Draft Energy Bill

The draft Bill focuses on Electricity Market Reform and includes three key areas – Contract for Difference, Capacity Market Mechanism and Emission Performance Standards. It was expected to be one of the first Bills to be introduced in May to have it on the statute book by the end of this year. However, it is widely acknowledged that DECC is behind with the Bill having still not decided upon final EMR proposals and so has published a draft Bill instead; to allow for pre-legislative scrutiny and further consultation.

Whilst most political observers and parliamentarians would welcome more pre-legislative scrutiny opportunities of Bills, the Energy & Climate Change Select Committee is extremely worried at the delay in publishing proposals (the Committee expected draft proposals before the end of 2011) in terms of investor confidence and thus leading to energy infrastructure targets being missed. Its Chairman, Tim Yeo MP, has also written to Ed Davey, the Secretary of State to outline his further concerns about the timescale for pre-legislative scrutiny of the Bill – set at five weeks – and has said the Committee will only be able to focus on Part 1 of the Bill.

Next steps with draft bill:

• Energy & Climate Change Select Committee to hold oral evidence sessions over the next five weeks on the draft Energy Bill. The first took place with the Big 6 on Tuesday of this week (12th June) and the next session will be on 19th June with Consumer Focus, the Renewable Energy Association and others giving evidence.
• Although the Committee requested written evidence to help with oral sessions by 4th June, they will still expect written evidence throughout its inquiry.
• Parliament rises on 15th July when the Committee has been asked to report back to Government on the draft Energy Bill.
• The Energy Bill is then set to be published in the Autumn and begin the parliamentary process which is expected to last until Summer 2013.

Further Government announcements:

• The Government will spend the summer looking at evidence in relation to a gas strategy which is expected to be published in the Autumn along with updates on the renewables roadmap, smart metering and its Carbon Capture and Storage competition.

Publication of the draft Energy Bill attracted considerable comments from industry, business consumer groups and NGOs. Greenpeace called it an “omnishambles of a Bill”. The quotes below give a flavour of the more measured reaction, upon publication of the Bill and since, much food for thought for DECC.

CEO RWE npower
"I applaud Government's appetite for reform, but pulling so many levers at once in such a complex area risks losing sight of your original objectives. What the energy sector needs now is simplicity and clarity; policy that puts the customer and Britain's economy at the heart of every decision we make."

CEO E.On
"We welcome the Government's commitment to ensure security of supply for customers through its capacity market proposals but we now need to accelerate the pace so that we have more detailed proposals later this year. In the meantime we welcome the work underway to develop an effective gas generation strategy."

Chief Corporate Officer, Scottish Power
"Up until now, we have prided ourselves at not having to factor in political risk to our UK investment decisions, but perhaps it is something we may need to consider in the future as we seek to invest billions of pounds in offshore, onshore and marine renewable energy projects. We want to help the UK to achieve its carbon reduction targets, and to do this we need certainty and consistency in energy market regulation."

CEO EDF
"....we have three clear, concrete priorities for this Bill. Firstly, it must move to a 'tangible counterparty' contractual model, which is clearly understood and precedented; secondly, it must ensure that an early CfD, which will be delivered through transitional arrangements, is legally robust for the long-term; and thirdly, we must work to ensure the Government keeps to its original timetable of Spring next year for Royal Assent."

Which?
"There are many unknowns and whilst it is encouraging to hear the Energy Secretary promising that these plans will be good news for consumers, we want to see more evidence and the small print before we can judge whether this will work for all of us who are expected to foot the bill."

IPPR Think Tank
"While the ambition to meet CO2 targets and ensure security of supply is correct, the Energy Bill has been beset by delays while specific measures within the package could raise voters' concerns about their number one issue, rising energy costs."

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Smart metering – data security

The rollout of 52 million smart meters, in every home throughout the UK and by 2019, is one of the biggest undertakings of its kind anywhere in the world. A number of issues and concerns have been raised not least cost, consumer engagement, and timescale but also the issue of data security. Lynne Sharp, Corporate Strategy Manager at Orsis UK, a Taylor Keogh client, wrote in industry magazine New Power UK about the issue of data security of smart meters.

In it she says: "The consumption information provided by a smart meter will simply be half hourly meter readings for electricity consumption, and half hourly advances for gas meters. It will NOT determine individual appliance use; it will not be able to tell when a kettle needs replacing; it will not tell you that you should have switched your heating off when you went out; and, as appeared in one response to the government’s prospectus, it will not tell you who was in the hot-tub with your wife when you were away on business!"

Sharp concludes that more information is easily available and obtainable through a person’s mobile phone usage today, than through having smart meters in homes in the future.

For a full version of the article please contact: mike@taylorkeogh.com

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Sleaford Renewable Energy Plant

Main construction work on the 38MW plant in Lincolnshire that will generate electricity from the burning of straw started last month. When it enters commercial operation in 2014, it will generate electricity for 65,000 homes and employ up to 80 people. During its construction phase, up to 250 people will be working on the site.

The move by Eco2Lincs, a Taylor Keogh client since the start of this year, was highlighted by David Cameron when he addressed a meeting of international Energy Ministers, as part of the Clean Energy Ministerial held in London in May. The Prime Minster said: "Britain has gone from virtually no capacity for renewables, to seeing them provide almost 10 per cent of our total electricity needs last year. And we’ve added more capacity for renewables in the last two years than at any time in the last decade. Our commitment and investment in renewable energy has helped to make renewable energy possible. Now we have a different challenge. We need to make it financially sustainable."

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For more information about our work and our clients in the energy and clean-tech sectors, please contact Paul Taylor on 020 3170 8465 or via email paul@taylorkeogh.com