Big news: some landlords of some properties might have to improve them by 2018

I’ve asked a couple of questions recently about when DECC intends to end the suspense over the commitment they made in the Energy Act before last (the Energy Act 2011). This commitment requires landlords of private rented properties to bring their houses up to scratch, as far as energy efficiency is concerned, or risk not being able to let them after 2018. Now I was on the 2011 Energy Bill Committee and naively, thought that this would be fairly simple to make happen. So simple, in fact, that, along with some other colleagues in the Bill Committee, I proposed an amendment pulling the date for compliance forward to 2016.

In the end, it was 2018 that made it into the legislation. And the Act states that, some time before 2018, ‘the Secretary of State must make regulations’ setting out how landlords of properties ‘in relation to which there is an energy performance certificate (EPC)’ must get their properties fit for letting by 2018. No level of efficiency is mentioned in the Act, but the talk at the time was that the expected EPC level to be attained would be the not exactly stunning level of ‘E’ or above. But nevertheless, capturing a swathe of properties which are notoriously poorly insulated and which are statistically disproportionately inhabited by people in fuel poverty would be a real step forward.

And then…silence.

At the last DECC questions before the recess, I was very pleased to hear my colleague, Jonathan Reynolds, receive a clear commitment from the Minister, Greg Barker, that DECC will definitely be consulting on the matter this summer. Just …er…two years and eight months after the Act became law.

So that’s all fine then (I’ve noticed that I keep using this phrase as an irritating stylistic device in a number of blog entries over event months…). Well not exactly (and I’ve noticed myself adding this even more irritating rejoinder on numerous occasions. In my defence, there is a clear ‘not exactly’ in this story, so it will have to do. I promise not to do it again though).

The ‘not exactly’ here is that, when the original clause went into the Bill, the Minister guiding it through (yes it’s our old friend Greg Barker again) seemed pretty certain that it applied to all rented property and all landlords. And I am afraid to say, the committee did not then examine the issue much further. But in fact, if you read the legislation fairly carefully, it doesn’t appear to apply to the whole sector.

Basically, the Act refers to ‘the property’ of the landlord throughout the clauses dealing with the 2018 requirement. What that means, it appears, is that a landlord who is renting out a ‘property’ will have to have to produce an EPC for that ‘property’ at an ‘E’ rating or above before he can let it out after 2018.

But, as may have been spotted by many people who rent such properties, landlords very often do not let out ‘a property’; they will let out rooms in a property, perhaps at different times. Something like 14,000 such properties – so-called houses in multiple occupation – in my city, Southampton, are let out in this way. On the face of it and as matters stand, it looks like a high proportion of ‘properties’ will simply be exempt from the requirement for this reason.

I did move a ‘ten minute rule‘ Bill a while ago to try to plug this gap with some simple wording to make the intention of the Act plain but unfortunately it went the way of all such Bills. So it’s now all down to the consultation, which is what the very same Minister told me in response to one of my questions (this is where we started at) which asked about whether the regulations would seek to include HMO landlords in the Act or not.

So I guess we will have to wait and see. I understand that nice Mr. Pickles over at DCLG is not keen at all on any regulations being laid, let alone any that include HMO landlords, so I’ m sure Greg will need all his legendary courage and fortitude to ensure this happens.

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The latest on that Nuclear negotiation (with apologies to the Scottish Daily Record, 2nd October 2013, and Tian Tian the panda)

The UK’s only likely nuclear power plant site is still behaving as though it is going to be built, DECC bosses said, as their wait goes on for the arrival of a deal.

Energy Minister Michael Fallon said they are still within the time-frame for a possible deal but stressed that EDF is “definitely not a textbook company”.

Nuclear power plant negotiation is not an exact science and it remains “really difficult” to tell if a specific negotiation will come to fruition, the department said in a statement.

Vincente (Sweetie) has been keeping his board, and the public, guessing over the possible power plant since he was artificially showered with cash well before April.

In August, DECC said EDF was showing encouraging signs of giving birth to a power plant. Vincente was later placed on 24-hour surveillance, with early expectations that EDF would come to an agreement in late August or September.

In early September, the department cautioned that any birth could happen much later than previously thought. Now it remains the case that no one can say for sure whether Vincente is gestating a power plant, or, if he is, when it might appear.

DECC said it is still possible EDF is expecting and they will continue to prepare for a new arrival.

“Nuclear power plant gestation is not a precise science and, combined with this, each company has their own individual demands and Vincente is definitely not a textbook CEO,” a departmental spokeswoman said.

“Whilst Vincente continues to behave like he’s about to agree to build a power plant and whilst his hormones, behaviour and physical changes suggest the same, we will continue to manage him accordingly; as soon as we know otherwise we will of course announce this.

“To put it into context, there are no experts around the world who can say definitively how long a nuclear power plant with no public subsidy takes to build.

“It is really difficult to tell if an energy company is serious and when they might develop something, mainly due to pseudo and lost development promises that occur with this type of company and that they can practise delayed implantation.

“Unfortunately the results from predictive tests used in nuclear power negotiations around the world to determine seriousness can only be understood historically and as time goes on and more results become available we build up a fuller picture of when Vincente could go for it. We are still within timings.

“A large number of cutting-edge scientific tests are still in their infancy. In fact, EDF is only the third company we have tried all this on with.”

If a power station does happen, it could easily be missed because of the small size of its output.

EDF and her shadowy companion the Guangdong Nuclear Energy authority arrived in Great Britain from France and China recently. DECC bosses hoped the pair would get them out of the clarts naturally when they produced enough underwriting.

But national security experts ruled out putting them together after assessing their behaviour and Vincente was artificially financially induced using cash from the British public and other sources.

 

For the original update on Tian Tian the panda please go to http://www.dailyrecord.co.uk/news/scottish-news/edinburgh-zoo-keepers-insist-giant-2331612

Freezes, geeks and voltage optimization.

I’m back from several days at the Labour Party conference, spent largely, I must admit, at some of the less obviously crowd-pulling fringe meetings and roundtables that conference always features, including a memorable and detailed exchange with a delegate on the subject of ‘voltage optimisation’. I know, ‘return to your constituencies and prepare for voltage optimisation’ doesn’t quite have that winning ring to it, but now that ‘geek-Ed’ has shed his mantle to morph into ‘he-man Ed'(by the way, you might like to have a look at Steve Bells comic strip in today’s Guardian to see how it was done….) there is clearly a big geek-space opening up.

So here’s a small bit of geekery on that commitment in Ed’s speech – you know, the one on freezing energy prices for twenty months when the next Labour government comes to power. I’m a little surprised at the overblown reaction from some, at least, of the big six energy companies on the specific point of a freeze. No-one likes having a potential profit line removed for a while, that is true, but no, of course, the imposition of a price freeze will not cause the end of energy investment, blackouts, companies closing down etc etc. It is, in itself a re-run, with similar justification and possible overall financial effect to the ‘energy windfall levy’ imposed by the Blair Government shortly after it came to power in 1997. That levy raised about £5 billion with no terrible consequences for anyone. This price freeze might produce the loss of about £4.5 billion in unsecured income for energy companies, depending of course, on what wholesale prices do in the meantime. Although some of the wailing may have to do with the fact that some companies have, in effect already staked out their outline price position by buying very far ahead of the curve in the gas market, and may find it difficult to adjust should the freeze go ahead.

This proposed freeze is different, however, in that it impacts at the point of the energy bill, and not when the balance sheet is totted up. And, of course it is quite explicitly part of a wider approach to energy markets, as Damian Carrington notes in an excellent blog piece in Guardian Environment.

That wider approach is signalled quite clearly in the letter to Energy companies from Ed Miliband, following the announcement of the freeze. ‘It means’ he says ‘ensuring that that, in the time taken to put a new system in place up to the start of 2017, we ensure that prices paid by consumers do not rise’.

Although it’s a bit sketchy right now, that ‘new system’ would, or could include the establishment of a ‘pool’ trading system (including transparent buying and selling of energy right out along the curve so that netted off arrangements and similar would not be possible). And also the break-up of integrated company structures, probably into free standing retail and generation arms for at least the ‘big six’ (but less clear about other ‘integration’ such as DNO ownership). So the price freeze would essentially be to hold the retail market in place whilst those changes take place, which themselves have implications for price maintenance for the future. Just freezing prices for twenty months makes little longer term sense unless there is something to follow it. Otherwise, prices simply pop up to compensate for the hiatus in rises. So the establishment of retail-only companies would have to followed by a price formula arrangement similar to that for water and rail and a new Ofgem would have responsibility, one might imagine, for future r+ and investment arrangements for those companies.

And then a further question arises. Should those far smaller companies with small asset bases expect to continue to take responsibility for the roll out of smart meters. The far larger, asset-rich generation companies arising from the previously integrated big six could, but as generators would have no standing in the process. Might District Network Operators (as I have long advocated) step forward to do the job far more simply and effectively, at that point?

So what energy companies are far more likely to be seriously alarmed about is this logical train of implication, not the price freeze itself.  And that is, in part because the combination of the price freeze and other measures does indeed break the implicit ‘don’t rock the boat’ truce on wider energy measures that has hovered around the increasingly drawn out and unsatisfactory nature of the design and implementation of Electricity Market Reform.  It will be difficult to make these larger processes work alongside each other, of course, since the early effects of much EMR implementation (the operation of early investment instruments, for example) will work, or potentially, fall to pieces in the region of the twenty month ‘window’ Ed Miliband sets out to make the changes within. And because of that now badly trailing process, it can be argued that there will never, or only in the distant future be a good time to implement measures outside the key changes of EMR itself. Whether you believe in the completeness of the those further measures or not, that is what Labour is now trying to do. It is seeking to remedy the glaring omission in EMR, namely that it doesn’t reform the market itself.  And I think it’s probably this that those who have become used to surfing on the way the market works at the moment are really upset about.