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Energy Bill (HL Bill 30 of 2013–2014)

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Energy Bill (HL Bill 30 of 2013–2014) Energy Bill (HL Bill 30 of 2013–2014) The Energy Bill is intended to establish a framework for delivering secure, affordable and low-carbon energy. This Library Note provides background information for the second reading of the Bill in the House of Lords on 18 June 2013. It summarises the report stage and third reading in the House of Commons on 3–4 June 2013, where debate focused on setting a decarbonisation target for the electricity sector, electricity market reform and consumer protection. The Note is intended to be read in conjunction with two House of Commons Library Research Papers, Energy Bill (RP 12/79, 13 December 2012) which sets out the background to the Bill, and Energy Bill: Committee Stage Report (RP 13/19, 12 March 2013) which summarises the debates during the Commons second reading and committee stage. Nicola Newson 13 June 2013 LLN 2013/013 House of Lords Library Notes are compiled for the benefit of Members of the House of Lords and their personal staff, to provide impartial, politically balanced briefing on subjects likely to be of interest to Members of the Lords. Authors are available to discuss the contents of the Notes with the Members and their staff but cannot advise members of the general public. Any comments on Library Notes should be sent to the Head of Research Services, House of Lords Library, London SW1A 0PW or emailed to [email protected]. Table of Contents 1. Introduction .................................................................................................................................................. 1 2. Commons Report Stage—Day One ....................................................................................................... 3 2.1 Contracts for Difference (CFDs) and Investment Contracts ................................................. 3 2.2 Emissions Performance Standard (EPS) ........................................................................................ 8 2.3 Consumer Redress Orders ............................................................................................................ 9 3. Commons Report Stage—Day Two ..................................................................................................... 11 3.1 Decarbonisation Target ................................................................................................................. 11 3.2 Electricity Demand Reduction (EDR) ......................................................................................... 17 3.3 Community Energy Schemes ........................................................................................................ 19 4. Commons Third Reading ......................................................................................................................... 20 5. Press Coverage .......................................................................................................................................... 22 Annex 1: Government Amendments at Report Stage (Day One) ...................................................... 24 Annex 2: Bibliography ................................................................................................................................... 26 1. Introduction Parliamentary Stages The Energy Bill (HL Bill 30 of 2013–14) was introduced into the House of Commons on 29 November 2012, and had completed its committee stage by the end of the 2012–13 parliamentary session. The Bill was carried over into the 2013–14 session following a motion agreed in the Commons (HC Hansard, 19 December 2012, col 963), and it completed its passage through the Commons on 4 June 2013. The Bill received its first reading in the House of Lords on 5 June 2013, and its second reading is scheduled for 18 June 2013. The Department of Energy and Climate Change (DECC) has published a webpage bringing together resources on the Bill, including impact assessments and policy briefs. A Draft Energy Bill was scrutinised by the House of Commons Energy and Climate Change Committee, which published its report Draft Energy Bill: Pre-legislative Scrutiny (HC 275-i of session 2012–13) in July 2012, and an informal House of Lords Working Group, chaired by Lord Oxburgh (Crossbench), which also published its Report on the Draft Energy Bill in July 2012. Outline of this Note This Note summarises proceedings in the House of Commons during the Bill’s report stage, which took place over two days on 3–4 June 2013, and third reading, which immediately followed. The Note is intended to be read in conjunction with two House of Commons Library Research Papers: Energy Bill (13 December 2012, RP 12/79) which sets out the background to the Bill, and Energy Bill: Committee Stage Report (RP 13/19, 12 March 2013) which summarises the debates during the Commons second reading and committee stage. A third short House of Commons Library Note, Energy Bill 2013: Update for Report Stage (SNSC6653, 30 May 2013), summarises some of the more controversial areas remaining for discussion when the Bill was carried over, although in the event there was not time for all of these to be debated at report stage. Copies of all these House of Commons Library Notes are available in the House of Lords Library. Part 2 of this Note summarises the debate on the first day of report stage, which focused on contracts for difference and investment contracts, the emissions performance standard, and consumer redress orders. Annex 1 summarises the numerous Government amendments made on day one without substantive debate. Part 3 of the Note summarises the debate on the second day of report stage, which focused on the date for setting a decarbonisation target, electricity demand reduction, and community energy schemes. Parts 4 and 5 of the Note summarise the third reading debate and the Secretary of State’s response to press coverage of the proceedings. Annex 2 contains a bibliography of reports and documents referred to in this Note, and also lists some briefings by the Parliamentary Office of Science and Technology (POST) which provide further scientific background on some areas of the Bill. Overview of the Bill The Explanatory Notes to the Bill describe its purpose as being to: ... establish a legislative framework for delivering secure, affordable and low carbon energy. At its core is the need to ensure that, as older power plants are taken offline, the UK remains able to generate enough energy to meets its needs even if demand increases. Doing this while also decarbonising requires significant investment in new infrastructure to be brought forward—over £100 billion—and new schemes to be integrated to ensure this investment comes forward. (paras 3–4) As introduced in the House of Lords, the Bill is structured as follows: Part 1: Decarbonisation. Establishes a framework for a decarbonisation target range for the electricity generation sector in Great Britain. This Part gives the Secretary of State a power to set a decarbonisation target range, imposes a duty on the Secretary of State in respect of any decarbonisation target range which is set and includes certain reporting requirements. Part 2: Electricity Market Reform. Reforming the electricity market with the aim of ensuring that electricity demands continue to be met over the coming decades. This Part includes provisions on contracts for difference and investment contracts, the capacity market, liquidity and market access, institutional arrangements in relation to the delivery of these schemes, a transition to a certificate purchase scheme for generation supported by the renewables obligation, and emissions performance standard for new fossil-fuel plants. Part 3: Nuclear Regulation. Establishes the Office for Nuclear Regulation with powers and responsibilities to regulate the safety and security of nuclear power plant, as well as to deal with the transport of radioactive materials, nuclear security and safeguards more generally. Part 4: Government Pipe-line and Storage System (GPSS). Measures to enable the sale of the GPSS including providing for the rights of the Secretary of State in relation to the GPSS, registration of those rights, compensation in respect of the creation of new rights or their exercise, and for transferral of ownership, as well as powers to dissolve the Oil and Pipelines Agency by order. Part 5: Strategy and Policy Statement. Measures applicable to the Authority [Ofgem] and the Secretary of State to create regulatory certainty by seeking to ensure that Government and the regulator are aligned at a strategic level. Part 6: Consumer Protection and Miscellaneous. Domestic tariffs: Measures to provide the Secretary of State with powers to amend licence conditions of gas and electricity suppliers to ensure domestic consumers are on the cheapest tariff with their supplier that meets their preferences. Third-party intermediaries: Extending the scope of activities which can be made subject to a licensing regime governed by the Authority to cover third- party intermediaries in the energy sector such as switching sites. Consumer redress: A measure introducing a new enforcement power for the Authority to require energy companies which breach licence conditions or other relevant regulatory requirements to provide redress to consumers who suffer loss, damage or inconvenience as a result of the breach. Offshore transmission: A measure to provide an exception to the prohibition of participating in the transmission of electricity without a licence for a person who participates in offshore transmission during
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