With EDF Energy still in talks with the government about building new nuclear plants, are we at real risk of running out of electricity?

Britain could have a new ‘fleet’ of nuclear power plants by 2030, if all goes well, but the first of the 18 projects is under threat.

EDF is negotiating hard with the government about the subsidy it receives for the energy generated at the new plant proposed at Hinkley Point, and has even reduced the number of staff working on the project.

Nuclear is seen as the one solution that appeases all in the energy and climate change debate; lots of relatively cheap, consistent power, without the pollution and carbon emissions.

But recently a group of senior nuclear scientists warned that it is “becoming increasingly concerned at the apparent slow progress of negotiations”.

The group, lead by Prof Sir David King, former chief scientific advisor to the Government said the whole project “could be undermined if a deal on the pioneer project is not resolved satisfactorily”.

What about other companies and forms of generation?

With few other plans to secure our energy for the long-term (at least until shale gas comes online) this could mean we have to import electricity from France and gas from Russia in the meantime, while the “strike price” is agreed.

We reported last year that Hitachi are planning to build at least 4 new nuclear power plants in the UK.

However, that seems increasingly unlikely to happen as the new Japanese government has reinstated their nuclear power program, meaning the company no longer have to look overseas for contracts.

Sources: Britain’s nuclear future at risk, experts warn – Telegraph | EDF Energy to cut jobs to control cost of building nuclear power station – Guardian | Energy security ‘at risk’ if ministers fail to seal EDF nuclear deal – Telegraph

A senior Conservative MP has this week launched a major policy intervention, suggesting radical changes to the utilities regulators.

Penrose had a state-funded education and held positions at J P Morgan, McKinsey, Thompson publishing and Pearson PLC before moving into politics

The document was released on Monday, suggesting that draconian utility regulators like Ofgem and Ofcom should have their responsibilities for the competitive sections of the market taken away.

This should be replaced with a more reactive style of regulation, by the Office of Fair Trading (OFT) and the Competition Commission, which are about to be merged into the Competition & Markets Authority.

This approach works well in other utilities and things we need every day, Penrose claims, such as television, clothes and food.

Penrose says that he high prices and poor service for which utilities are infamous in the UK, is not caused by the fact that they all used to be state-run bureaucracies. It is more to do with the regulation of those industries in an ‘ex ante’ manner.

The Big Regulator model is more expensive, creates slow-moving firms that are less customer-focused, takes economically inefficient and inaccurate decisions and is more prone to capture and lobbying by producers or consumer groups

‘Ex ante’ (‘before the event’) regulation means the rules are laid down in advance, and companies are told how they should behave and perform, rather than being given free reign to do their own thing, allowing market forces to drive customer service up and prices down in a truly competitive market.

The suggestion is that ‘ex ante’ regulators have their powers over the competitive parts of their markets over to the OFT and the Competition Commission.

This will facilitate an ‘ex post’ (after the fact) style of regulation, in which the powers that be can deal with any problems brought to them by the consumer. Penrose calls this the ‘Big Consumer’ model, as opposed to the ‘Big Regulator’ one that controls utilities at the moment.

Penrose said “These ideas could either be picked up by coalition Government Ministers, or they could form part of any Party Manifesto for the next election”

More: Former Minister launches utility market reform proposals – johnpenrose.org | We Deserve Better – Full Document

The island nation has become the first country to extract natural gas from methane hydrates frozen underneath the sea.

Japan has scarce resources, currently relying on imports for most of its energy supplies

New technology could lead to the gas being commercially extracted in the coming years – as the technology improves and it costs less to extract.

Although frozen gas is currently very expensive compared to other methods of extraction, it might be able to compete with other sources of energy on a financial level in the future.

The Ministry of Economy, Trade and Industry said that a flaming pipe 50 miles off the coast of central Japan in the Pacific Ocean, was burning gas extracted from methane hydrates.

Scarce Resources

The principle is similar to that used to extract gas from shale. New technology is making more from sparsely distributed reserves of gas locked inside air pockets in shale, and can do the same for frozen gas – gas that has been frozen into a solid due to the extreme pressure.

The process works by reducing the pressure in the underground layers up to 1300m below the seabed, and then dissolving it into gas and water, collecting the gas as it is released.

In countries where natural resources are scarce, this could represent a new way to energy security, as countries like Japan seek to make the most of what they have.

director of the oil and gas division at Japan’s Agency for Natural Resources, Ryo Minami said: “Ten years ago, everybody knew there was shale gas in the ground, but to extract it was too costly. Yet now it’s commercialised”.

Sources: Japan becomes first nation to extract ‘frozen gas’ from seabed – Guardian

Scottish & Southern Energy (SSE) have been found guilty of the most widespread case of mis-selling in the history of the UK utilities market.

The energy giant was found guilty of cultivating an internal culture of lying and misleading customers over the phone and on the doorstep.

Ofgem, the energy regulator has called it the most “prolonged and extensive” case of mis-selling it has ever seen, hence it has handed down the largest ever fine of its kind.

Ofgem, which is currently conducting its Retail Market Review of the business energy sector, highlighted the seriousness of the situation with this statement:

“In particular, SSE consistently failed, over a prolonged period of time, to conduct its sales activities in a way that would provide clear and accurate information on prices and potential savings to enable customers to make an informed decision about whether to switch suppliers”.

Make sure you never get mislead when buying business energy!
Use a broker accredited by the Utilities Intermediaries Association (like us!). Read about what the UIA is and why we are a member

The breaches found included:

• Being put on a more expensive tariff than before
• Direct debit payment being set too low
• Misleading statements during telesales call
• Failures in management arrangements

These and other breaches were found to last between 1 and 3 years.

Investigations into ScottishPower and Npower are still ongoing.

Read the Ofgem press release here.

Conservative MP Fallon has been appointed the role as part of a ‘mini reshuffle’ of the cabinet.

The old Energy Minister, John Hayes, will now act as a political and parliamentary adviser to the Prime Minister.

A mere 6 months after his appointment, John Hayes leaves his post as Minister for Energy, having kicked up a bit of a storm about wind power the day he took the job, saying that ‘enough is enough’.

He was slapped down by Ed Davey though, who quickly reminded us all that, although the Conservatives run the treasury, the Liberal Democrats run the Department for Energy & Climate Change, and therefore would dictate policy.

Mr Fallon will perform the role in tandem with his duties as Minister for the Department of Business, Innovation & Skills.

In an official statement, Downing Street said:

John Hayes MP to become a Minister without Portfolio (Minister of State), Rt Hon Michael Fallon MP to become a Minister of State at the Department of Energy and Climate Change in addition to his current role as a Minister of State at the Department for Business, Innovation and Skills.

The Shadow Energy Minister, Caroline Flint, has said that Mr Fallon can only act as a part-time minister, claiming that he can not perform his duties properly.

GOV.UK currently says: “The exact portfolio of the Energy Minister is still to be confirmed following the appointment of the Rt Hon Michael Fallon MP as Minister of State in addition to his current role.”

Links: Michael Fallon at GOV.UK Department for Business Innovation & Skills | Department of Energy & Climate Change

The energy regulator will protect 160,000 more businesses from sneaky supplier tactics from this summer.

Ofgem are to put extra measures in place to stop electricity and gas companies from treating small and medium size businesses unfairly.

Measures include plans for simpler, fairer business tariffs, an enforceable code of conduct for energy suppliers, and more time being given to switch supplier when your contract runs out.

The measures will extend the rights put in place since they introduced Ofgem Condition 7A into all business energy suppliers’ terms & conditions from 18th January 2010.

Resource Page: Ofgem Retail Market Review – read about the RMR in more detail

Summary of changes:

• New, enforceable code of conduct for suppliers
• Small firms to get contract end dates and renewal dates printed on all energy bills
• Small firms to get more time to notify their supplier of intention to switch
• 160,000 extra businesses protected
• Ofgem to consider banning rollover contracts entirely

This is part of the Retail Market Review that Ofgem have been conducting since 2011, which emerged as the result of the 2008 Enery Supply Probe, which found that anti-competitive practices such as being rolled into long, expensive contracts were rife in the business energy industry.

The rules will now cover businesses spending up to ~£10k per annum, instead of ~£5k as currently.

Sources: Retail Market Review – protecting businesses – Ofgem | Ofgem unveils new standards of conduct to protect small businesses – Utility Week | Smaller firms get tougher protection from suppliers – EnergyLiveNews

Tax breaks for shale gas companies, and Climate Change Levy Exemption for ceramics companies were announced in the 2013 budget.

The Chancellor George Osborne today unveiled his 2013 budget, which he said would help “those who want to work hard & get on”.

But there was no sign of the new, simpler ‘carbon tax’ that we thought might possibly replace the CRC Energy Efficiency Scheme.

Shale Gas

In his autumn statement, George Osborne made a promise to the UK that he would take steps to encourage the development and exploration of our shale gas reserves.

During his budget speech he said: “I want Britain to tap into new sources of low-cost energy like shale gas… Shale gas is part of the future. And we will make it happen.”

Britain has massive reserves of shale gas. Enough possibly to power our whole country for another two or three hundred years.

Shale gas is extracted by drilling into shale rock formations and injecting a mixture of water and chemicals into the rock at high pressure. This gas extraction technique is known as ‘hydraulic fracturing’, or fracking as it has fast become known.

Companies wishing to extract gas from shale can now get a tax allowance for developing gas fields and can offset their spending against tax for the next ten years.

Climate Change Levy Exemption

The Climate Change Levy is an environmental tax most companies need to pay. It is levied on businesses, and is used to fund investment in renewable and low-carbon technology.

The Chancellor has announced in the budget that the ceramics industry will from be given exemption from the charge in future, and plans to exempt other ‘energy intensive’ industries in the future.

For organisations that use large amounts of electricity, the CCL is a large chunk of their overhead, so this should make it much easier for them to remain competitive with companies from overseas.

Sources: Budget 2013: green measures at a glance – Guardian | Budget 2013: George Osborne commits to UK shale gas boom – Guardian | Ceramics saved from climate change tax – Telegraph | After ‘bribes for wind farms’ communities are offered money for fracking – Telegraph

Due to the Feed-in Tariff (FiT) costing more than expected, all companies that pay a business electricity bill could face extra charges.

Since the 1st April, any household or business that generates their own renewable energy receives a subsidy for every unit of energy they produce.

This subsidy is paid for through the bills of those who choose not to generate their own renewable energy, and has largely been built into the standing charges and unit rates, meaning it has in effect been hidden on your bills.

Until now, that is. The Feed-In Tariff Costs that Ofgem charges have increased since April 2010, and from April 2012 some suppliers are passing it on to customers directly.

Resource Page: Feed-in Tariff Charges – read about the Feed-in Tariff in more detail

There are 3 things you need to know:

1) Most suppliers are now adding Feed-In Tariff charges to business electricity bills!
[Expected for 2013: 0.18p/kWh]

Suppliers will be adding a separate line to your bills labelled ‘Feed-in Tariff’.

2) Some suppliers are adjusting contracted rates to accommodate for these costs!

There may be adjustments to be made, if suppliers haven’t been charging enough.

3) Some supplier prices currently include Feed-In Tariff charges and some do not!

Some of our quotations may not be like-for-like, please bear with us.

For more information see the Feed-In Tariff (FiT) Charges page

More on Feed-in Tariffs: GOV.UK | Ofgem

The largest carbon emitter Britain is to stop burning coal to comply with EU laws, and will instead burn imported American wood chips.

Running on coal, Drax has long been a symbol of Britain’s energy industry, but its move to biomass means it is fast becoming a symbol of our confusing and convoluted present day energy policy.

Built right next to the Selby coalfield in the Seventies for easy delivery, and expanded in the Eighties, it is easily the largest power plant in the UK. It burns 36,000 tons of coal a day, single-handedly emitting more CO₂ than any other source in the country.

These carbon emissions combined with government policy are leading Drax to make the switch to biomass, as current plans will soon make coal too expensive.

The UK is committed to producing a third of its energy from renewables by 2020, and biomass is considered ‘renewable’ as the theory says that burning wood (or other biomass, like grain) only emits the amount of carbon it took from the atmosphere for the tree to grow.

This though, doesn’t take into account all of the carbon emissions that arise from processing, transporting and storing the wood chips, which could be high enough to make the carbon savings negligible.

Carbon Tax – 2013 Budget

From April 2013, there is to be a mandatory carbon price floor of £16 per tonne of CO₂ emitted, set to rise to £30 per tonne by 2020, and likely to more than double again by 2030.

It is this new carbon tax being brought in by the Chancellor George Osborne, that is forcing Drax to make the change for financial reasons. The CBI has already called for carbon-intensive industries to be exempt from the carbon price floor.

As well as taxing coal so highly, the government has decided that any coal plants burning ‘biomass’ (wood, in this case) qualify for a near 100 per cent subsidy, like onshore wind farms currently do, which will paid for by every household and business through their energy bills.

What we now have is a power plant designed to burn coal, creating the same amount of energy from burning wood chip, but at double or triple the total cost.

This will inevitably be passed on to the end consumer, as the government tries to subsidise low carbon energy by placing sky high taxes on fossil fuels.

This month will also see the closure of many of our remaining coal-fired power stations, leaving us even more dependent on imported gas, which is likely to drive prices even higher.

Sources: Eco madness and how our future is going up in smoke – Daily Mail | George Osborne’s CO2 tax will double UK electricity bills – Telegraph | Green light for two new biomass plants totalling over 500 MW – Renewable Energy Magazine

Nearly a year after a significant leak was found, a gas field operated by Total Gas & Power is to be restarted.

Production at the Elgin gas platform, which is situated 240 km east of Aberdeen, was suspended when gas was found leaking last March.

The investigation into what caused the leak is still ongoing, but the Health & Safety Executive (HSE) has deemed the site safe.

A Total spokesperson said it would restart production as soon as possible.

HSE said: “The company undertook to demonstrate that it had re-evaluated the risks associated with operating the installation by resubmitting the safety case required by HSE to permit production.”

The field was producing about 9% of the UK gas production at the time of the leak, which caused 238 workers to be evacuated.