Well, Electricity Market Reform and the legislation necessary to make the Green Investment fund into a Green Investment Bank (eventually) have both crept into the Queens speech, which means we will have legislation on these matters sometime before the middle of next year. As far as electricity Market Reform is concerned, exactly when during the next year a bill gets underway, and what it is likely to consist of in the end is looking increasingly interesting.
Why? Because any serious delay in putting something in front of the House risks some fatal timetable delays in putting in place the heath-robinson contraptions that will ‘frame’ the new worlds of delivering ‘secure clean and affordable electricity’ (as the Queens speech puts it). It will be difficult to issue legally workable ‘contracts for difference’ as it stands, but rather impossible if the legislation is not there in time to do so.
But herein lies a dilemma. The scribes below DECC are working overtime to write the bill up in a coherent form, and are still some way from doing so, I understand (publication of a ‘bill’ on May 22nd notwithstanding). But in the meantime, rapid shifts in reality drain the words off the page. I’ve previously alluded to the difficult writing task that the revised version of the revised version of CfD counterparty agreements will present: and just as the shape of the reforms gets boiled down into something approaching English, so the purpose of much of it (to subsidise new nuclear without appearing to do so) is falling away before our eyes.
I am not sure how widely the near meltdown of UK nuclear policy is currently understood by the wider policy community: I am sure DECC appreciates it internally, even though it has to smile and whistle (and probably throw in a bit of pantomime mugging for good measure) as the policy drifts off down the swannee. Two pieces in the last two days in the ‘Times’ throw some light on this. The headlines tell their own story (both behind paywall). The first one: ‘soaring [capital] costs threaten to blow nuclear plans apart’ (£) – recounts how the likely price of EDFs two nuclear reactors (as I set out previously here) the only ones left that are likely to be built currently) will rise to £7 billion a go. What the piece doesn’t say, but I will, is that the ‘levelised’ cost of nuclear power as compared with other forms of electricity, currently projected to be cheaper than most, depends entirely on estimates of capital cost and reactor build times, because of the extreme capital top-heaviness of nuclear energy. So as ‘costs soar’ and timetables become increasingly stretched out, so too should estimates of cost of delivered power, which I think we’ll find is now running at among the most expensive rather than the cheapest power option. The second piece ‘French elections may leave nuclear no longer an option’ (£) reflects on the probable course of energy policy in France following the election of Francois Hollande, and its effect on the already cash-strapped government–controlled EDF.
Put all that on top of the collapse of the Horizon consortium and the picture is looking very bleak indeed. (I did mention ‘Russian Oligarchs’ as the only likely interested parties in buying the assets of the consortium as a joke at the time, but now it looks like it might be true in the shape of the Russian State Oil corporation, along with possible Chinese interest… hmm). Meanwhile, the government has announced today after the Queens speech that ‘The energy bill will be published on May 22nd for pre-legislative scrutiny.’ It will be interesting to see just how complete the bill is at that point. Not very, I think will be the answer. It will arrive in the form of an incomplete draft bill, scrutinised perhaps over two months by a select committee, and not ready to be introduced as an actual Bill until late Autumn at the earliest. But even with this process, much of the die is cast as to structure. The urgent rethink clearly now needed on nuclear policy will have to take place just as the architecture of the previous arrangements becomes cast in stone. Rethink and possibly crash the timetable for EMR, or don’t rethink and produce an on-time turkey that isn’t fit for purpose. A dilemma indeed.
UPDATE: Since I wrote this, DECC have mysteriously removed the date of May 22nd for the publication of the EMR Bill from their website and replaced it with ‘We will shortly publish a draft Bill for pre-legislative scrutiny, to enable swift passage of well considered legislation.’ Since May 22nd is normally understood to refer to a date (in this case May 22nd) and ‘shortly’ is a well-known Parliamentary term for ‘when we get round to it,’ maybe this change is less mysterious than appears at first sight.