Rented homes and energy efficiency: a sad tale of intention and action

Lost in the mists of time (or 2011, to be precise) yet another Energy Bill found its way onto the statute books.  Most of us have probably forgotten what was in that bill, since several, rather more meaty examples of the species have come along since.  I haven’t, since I had the pleasure of sitting through an interminable series of committee meetings debating the finer points of the Bill. One such example was legislation requiring landlords to uprate the energy efficiency of their properties to a specified level by 2018 or face being unable to let them out, providing that the cost of the improvements would not be disproportionately burdensome. Some of us at the time thought that the 2018 date was a bit far in the future, but generally, the proposal had strong all party support and passed into law.

But, and there always are buts, the proposals required some secondary legislation to come to pass. Not least a specification of what energy band those landlords would need to attain, and what limitations on landlords’ expenditure would be regarded as ‘reasonable’. Furthermore, there was a question, which the committee at the time seemed to think would not be a problem, but the wording of the legislation later demonstrated otherwise, of what properties exactly would be covered by the new requirement? Would it just be where landlords were renting out an entire property to a tenant and would therefore obtain one energy performance certificate for the whole property? Or would it include the probably more numerous instances where properties were being let to more than one tenant – divided properties or multiply occupied homes?

Well, here we are three years later, and wooo, the first of the ‘buts’ has eventually been made into an ‘and’. At the end of July, the Department has finally got round to producing a consultation paper on how the proposals in the Bill will actually be implemented. You might have missed it by going on holiday, but it does mean that secondary legislation will now be prepared before 2018 is actually upon, us, but only just. And the good news is that the Department has set out the level of attainment that will be expected.  Landlords will have to improve their properties up to band E – not great, but since private rented properties are disproportionately to be found at the very lowest of the energy efficiency bands, in itself a real advance.

The second of the ‘buts’, however, remains firmly in that box. The Department has essentially bottled it as far as making the proposal into anything like a comprehensive measure covering all rented properties, and is proposing that the legislation only covers whole house lets. This means, not to put too fine a point on it, that the majority of properties will probably now entirely escape the requirements of the legislation. And if you are a prospective tenant looking to rent just part of house, you can be assured that your dwelling will remain just as draughty and fuel inefficient as, statistically at least, it will always have been. This wasn’t the intention of the legislation and I can only think that someone, somewhere has succumbed to a lot of pressure from some significant interests to drop the idea that the new laws might actually work properly.

I’ve been trying to get this omission plugged for some time now and I recently put a mini bill into the system with the specific aim of placing words onto primary legislation that ensures that all lets have to be included in any minimum standards programme. Unfortunately it is very unlikely to make any progress, so it is really down to the Secretary of State to change his mind about the omissions in the proposals for implementation. If you see him over the next couple of weeks, perhaps you can mention it to him…

This article first appeared in Business Green

Down with reshuffles!

Rather a lot has been written about the recent Government reshuffle, most of it of the ‘who’s up/down/in/out’ variety. I don’t want to add to that, but I do want to have a brief last word on the process, and what better Department to focus on for that than the Department for Energy and Climate Change. That Department has suffered quite a grievous loss with the departure of Greg Barker. I have had my disagreements with Greg over the years on a number of his policy directions, and one of his main initiatives, the Green Deal, effectively lies in ruins as he departs. But overall I thought he was a great minister for the Department – he fought the DECC corner assiduously, cared passionately about climate change and its consequences, and was quite fearless in pursuing that agenda in government, often against the rumbling and grumbling about it all from many of his own side. He linked and defended the energy and policy priorities of the department on renewables and low carbon energy at a time when it would have been easier to capitulate to the siren voices (also often from his own side) suggesting that the whole process should be put in a bottle and floated out to sea.

But there are two points in this little paean that stand out. Firstly, that Greg came to his post having had a substantial record of commitment and interest in the subject beforehand, and secondly, he stayed in the same post for almost the whole term of the present government. That’s a two edged sword of course in that you often have to deal with the consequences of your own policy initiatives when they return to bite you and not your successor. But it is quite a simple idea that maybe if you are appointing Ministers to positions it would be good if they knew about or had some interest in what they were being tasked with beforehand. And an equally simple idea is that probably, far better policy outcomes are likely to result from square pegs being able to occupy square holes for an extended period rather than almost continuously being uprooted and jammed into some round hole somewhere else.

Certainly, neither of those two simple plans has been in operation just across the corridor from Greg’s erstwhile office. Since this time two years ago no less than four nameplates have been nailed to the Minister of State’s door: Hendry has given way to Hayes, who has given way to Fallon (with two other jobs to occupy him anyway) who has now given way to Matt Hancock, incidentally, all during a time when the brief to steer Electricity Market Reform through all its stages was of crucial importance. I would have thought that just catching up on the vicissitudes of that particular programme probably occupied the waking hours of both of Charles Hendry’s successors until, still immersed in trying to get to grips with capacity payments and Contracts for Difference, they were set free and packed off to pastures new. I’m sure both the new recruits to the Department will be hard working and attentive, but try as I might, I cannot find much of a trail of interest or knowledge about what DECC is doing, other than, perhaps that neither of them like wind farms very much.

But I also ought to say that this is not particularly their fault; all too often it is just how the system works. Posts are allocated and occupied as if they bear no relation to what they are supposed to be about, but instead simply signify (where I came in) who is up, or down, who is in or out, and who is just visiting on the way to somewhere else better and more ‘in’. That cannot help good governance or policy-making, or the welfare of the important Departments subject to the merry-go round.

So my final word on reshuffles is this: that there ought to be less of them. And that there ought to be more Greg Barkers, enabled to do a job in a Department that they value and allowed to stay there for long enough to make a difference in the way that for all his idiosyncrasies and occasional rushes of blood to the head, Greg undoubtedly did.

DECC pokes the bear again on capacity markets

bear

Maybe it’s getting a bit wearisome to keep on pointing this out and I know that I’m getting a bit like a bear that wakes up when prodded with a stick etc. But …yes it’s the capacity market again. The latest is a press announcement from DECC that ‘Britain’s energy security strategy [is] now fully in place.’ This refers, in case you didn’t know, to ‘the amount of electricity generation capacity the government will procure’ through the capacity market, which as long-toothed readers of this blog will know, will be done through a series of ‘capacity auctions’. These auctions will see Britain’s gas fired power stations, present and future, being invited to bid to receive large amounts of money to persuade them to continue to be available to produce power (i.e. not shut down). As the Secretary of State says in his breathless press release, this is so ‘the ticking time bomb of electricity supply risks’ can be averted.

And now we’ve got the figures and the likely cost to consumers. The Government is aiming, the report says without a trace of a smile, to procure ‘a total of 53.3 GW of electricity generating capacity.’ In case you aren’t up with this capacity game, that is, incidentally, TWICE the amount of new gas fired power capacity that DECC estimated in its 2012 Gas Strategy would be needed by 2030. It’s also about 20% more than the total amount of gas capacity the Department estimated would be likely to be installed by that date. So yes, you could say that this is quite a secure amount of gas fired power stations to procure, since it seems that every conceivable source of gas fired power between now and 2030 will get free money to persuade it to be there.

And of course, thanks in passing to the redoubtable Emily Gosden, writing in the Telegraph about the announcement, we know the cost to consumers of this bonanza for gas fired power stations – on average £13 a year on bills. DECC had initially put the figure out as £2 on their press release, but accepts that, well yes, that is net of some very heroic assumptions about what may turn up in advantages on price as a result of the policy, so it really should start at…£13.

Ah but this must all be OK, says DECC because (back to the press release again) the whole shebang has been OK’d by experts: ‘the analysis supporting the decisions made today has been impartially scrutinised and quality assured by the panel of technical experts for the enduring regime’. Well…up to a very small point. When you read the small print of the Panel report, it is made clear that, according to the terms of its establishment, the Panel:

‘has no remit to comment on EMR policy, Government’s objectives, or the deliverability of the EMR programme. The Panel’s Terms of Reference mean it cannot comment on affordability, value for money or achieving least cost for consumers. These matters are excluded from the Panel’s scope and therefore from this report.’

So not much to comment on at all really.

Which I suppose is just as well, because if the panel did have such a remit, it could not have failed to turn up the infamous 2011 impact assessment on the comparisons between a capacity market and a strategic reserve, the option for energy security which in the words of DECC at the time,

 ‘is a targeted capacity mechanism. The system operator tenders for capacity to be part of the strategic reserve. The capacity is then kept outside the market and only deployed at times of scarcity i.e. when there would be blackouts or brownouts in absence of the reserve being deployed.’

Far more sensible you might think, and it has the advantage of ‘being a smaller intervention in the market and of having a smaller impact on bills’ (DECC’s words in 2012, again). Just how much smaller is shown in comparative costings in the 2011 Comparative Impact Assessment, where the proposed capacity market is projected to come out at a cost per year of about what has now appeared.  The strategic reserve comes in at about ONE FIFTH of the cost. It was rejected as an option after a series of ‘qualitative’ analyses, which I know had at least one former DECC civil s
ervant scratching his head at the time when he reported (to me) ‘ all the time during this period it was clear to all of us that the strategic reserve was the right way to go. How we ended up with this, I really do not know’.

Well we have and it’s going to cost us. It strikes me as rather like announcing that you are going to concrete over the Somerset Levels to a height of six feet and then proclaim that ‘a flood prevention strategy is now fully in place’. It really is such a silly long term policy that I cannot believe it will last for the time it will take to procure all this 52.5gw of gas fired power stations. But you never know: stranger things have happened.