Lobby sustainability

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On the stump Liz Truss, environment secretary (Con) In the first in a series of Lobby columns, front rank politicians set out their stalls in the pages of Utility Week.

Election / Party conferences

Greens fill in the blanks

The latest instalment in our special pre-election coverage examines the sometimes competing demands of sustainability and resilience.

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“We trebled the support available to 2020” Energy secretary Ed Davey (Lib Dem)

set up a working group to establish exactly what this means for the industry. In the energy world, resilience is usually translated as security of supply. The winter of 2013/14, narrowing supply margins, the spectre of rising gas prices and the escalating Ukraine-Russia conflict, have made the government keenly aware of the need for resilient energy supplies. The demand-side balancing reserve was a new tool created by National Grid after the government and Ofgem raised concerns about a potential peak winter shortfall. How the new government decides to proceed with water and energy resilience – in a sustainable fashion – is key. Investment decisions rest on what choices the incoming government makes. And resilience is now a key part of this decision-making process. The next government will have to decide which projects to back and support to provide reliable low-carbon power, and work in tandem with Ofwat to ensure European regulations are met to ensure water security for the future. Updates at: www.utilityweek.co.uk

After her “mind blank” during a national radio interview, Natalie Bennett closed off the Green Party’s spring conference with a scripted and wellrehearsed speech. She declared that her party has “taken its place at the forefront of UK politics” and has seen 13,000 new members join the Greens over the past 12 months. In her keynote speech, she stated that her party would not form a coalition with the Conservatives, but did not rule out playing a part in assisting Ed Miliband into Number 10. “The way things are in Britain is not sustainable,” she told delegates in Liverpool. “Continuing as we are is not an option.” The long standing Green Party policy to ban all cars was rejected, but their opposition to oppose fracking remains a strong as ever, as does the commitment to “call time on the trashing of our natural world”.

Annual spending on electricity policies within the Levy Control Framework is forecast to be £6.9 billion in 2020/21 £ million 8,000

CfD FIT RO Total Electricity policy upper limit

7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

2014/25 2015/16 2016/17 2017/18 2018/19 2019/20 20/21

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“We must ensure we deliver to future generations a planet that can sustain them as it sustains us.” Maria Eagle, shadow environment secretary, (Labour)

It’s not just about going green

ustainability. To most people that means windfarms and other renewable technologies. The more broad-minded may expand this out to sustainable water sources, and ensuring the environment has enough water to remain healthy and abundant. These two strands of thought are reflected in the 2008 Climate Change Act – signed by then-energy secretary Ed Miliband – and the European Water Framework Directive. These have enshrined the UK’s commitments to a more sustainable energy supply and for more sustainable and protected water resources. Resilience, which the Oxford dictionary defines as “the capacity to recover quickly from difficulties; toughness”, should walk side by side with sustainability policy development but has often lagged behind. Recently, though, it has assumed due prominence. In the Water Act 2014, the government placed a duty on Ofwat to ensure water companies could secure the long-term resilience of water and sewerage services, and of water and waste water networks. The regulator has

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2014/25 2015/16 2016/17 2017/18 2018/19 2019/20 20/21 58 355 917 1,648 2,175 2,534 726 834 924 999 1,051 1,079 1,096 2,796 3,213 3,336 3,348 3,332 3,320 3,296 3,522 4,105 4,615 5,264 6,030 6,574 6,927 3,300 4,300 4,900 5,600 6,450 7,000 7,600

N ote: These forecasts are taken from the June 2013 reference case runs of the DDM. The proportion of spending on the contracts for difference scheme as opposed to the Renewables Obligation is highly uncertain. Source: Decc

“The 2020 LCF deadline is like a cliff edge” Shadow energy minister Julie Elliott (Labour)

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ecause utility services are essential, utility companies have a special obligation to behave responsibly and provide the highest levels of service and best value for money. We inherited from Labour a broken energy market which we have been working hard to fix. As part of this we have introduced a new annual competition test, carried out by the Competition and Markets Authority. It is currently undertaking a review of “We inherited the energy market from Labour which will report in late 2015 – if it a broken considers it necenergy essary, it has the market” power to reform and restructure the market . Over the past few months we have seen a steady fall in the price of oil and wholesale energy prices on the international markets. We are starting to see companies pass on these cost reductions to consumers, with many companies already announcing a cut in bills of 5 per cent. We have been clear that other energy firms must follow suit and pass on the savings they are now making. The fact that energy bills are falling only serves to highlight the chaos that has now engulfed Labour’s policy to freeze energy prices. Before wholesale prices were falling, it was clear bills would go up before their freeze and after it. Now prices are falling it would keep bills artificially high. Even worse, experts have said bills would be even lower today, and in fact would have been cut by around 7 per cent at the end of 2014, were it not for the uncertainty and the concern over the potential effects of Labour’s policy. As a government, we have also worked to bring down the costs of energy for consumers. By cutting green taxes and levies, we have brought down the cost of the average energy bill by £50. We have also legislated to make sure households get the help they need to access the cheapest tariffs offered by the energy companies. For those who are elderly and vulnerable, a £140 discount is available on their electricity payments and the Conservative

Party, having protected winter fuel and cold weather payments during this Parliament, has committed to doing so again in the next Parliament. We want to see energy companies continue to pass on the benefits of falling wholesale prices. But our action has not just been related to energy companies, and since 2010 we have worked to improve the performance of the water industry. The Water Act 2014 will reform the water industry to make it more innovative and customer-focused. For the first time, businesses, charities and public sector customers will have the freedom to switch supplier. This, and other market reforms, will benefit the economy by some £2 billion over the next 30 years. Under Labour, average water bills increased by more than 20 per cent. That is why we were pleased that for 2015-20 Ofwat set water bills to fall by around 5 per cent. This will not come at the expense of investment, with companies pledging to invest £43 billion in new infrastructure and better services for customers. This compares to what was agreed in 2009 under Labour, which meant only £25 billion was invested during this Parliament. We have worked with the water industry so that companies do more to improve their governance, including by increasing the number of independent people who sit on their boards, and redouble their efforts to tackle unpaid water bills. There has been much discussion recently about social tariffs. Eight water companies have these in place and a further seven are proposing schemes. But we recognise that a mandatory social tariff, of the kind proposed by Labour, is not the answer. Such a top-down measure would fail to take account of different circumstances in different areas of the country. The next Conservative government will continue to work to make sure utility companies invest in new infrastructure and deliver the best customer service and value for money, while ensuring measures to tackle climate change do not lead to bills being forced up. We want to see energy and water bills kept as low as possible for hardworking taxpayers.

“Energy security and resilience doesn’t just happen by accident. Planning to make it happen is ­meticulous.”

Ed Davey, energy secretary (Lib Dem)

“As so often with the environment, it’s the dull things that work. Fix that dripping tap. Get a water butt. Have a shorter shower.” Caroline Lucas MP (Green)

Utility week Lobby poll tracker 6 Mar 2015 – YouGov poll Party Share Change (from 27 Feb) Conservatives 34% 0 Labour 33% -1 Lib Dems 8% 0 Ukip 15% +1 Green 5% 0 Other 5% 0

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