Welcome to this month's Energy & Utilities update, keeping you up to date with the major developments you need to know.

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Capacity Market

Consultation on the Capacity Market 2021

A consultation seeking views on proposals on incremental and technical improvements to the Capacity Market in 10 areas. Consultation ends: 16 April 2021.

Department for Business, Energy and Industrial Strategy, 5 March 2021

Energy Regulation

Ofgem publishes RIIO-2 Exit Capacity Planning Guidance

An Ofgem document sets out obligations for exit capacity booking and will take effect from 1 April 2021. The document should be read in conjunction with Gas Transporter Standard Special Condition A57.

Ofgem, 19 March 2021

RIIO-2 NIA Governance Document

A document setting out the regulation, governance and administration of the RIIO-2 Network Innovation Allowance which will take effect from 1 April 2021.

Ofgem, 19 March 2021

The Gas (Standards of Performance) (Amendment) Regulations 2021 (SI 2021/257)

These Regulations amend the Gas (Standards of Performance) Regulations 2005, which impose minimum guaranteed standards of performance in respect of the service provided by gas transporters, and prescribe sums payable to a customer by way of compensation for failure to meet these standards.

Explanatory Note

Ofgem consultation on Fair Treatment Guidance

A consultation seeking views on a proposed draft of the Fair Treatment Guidance for the gas distribution networks (GDN). The guidance document is associated with Standard Special Condition (SSC) D21 (Treating Domestic Customers Fairly), and is intended to help the GDN and their representatives understand the Standards of Conduct under SSC D21. Consultation ends: 12 April 2021.

Ofgem, 12 March 2021

Modification of the Regulatory Instructions and Guidance (RIGs) for RIIO-GT1 Gas Transmission Price Control

Ofgem is proposing to amend the Gas Transmission Regulatory Instructions and Guidance to clarify existing reporting requirements. Consultation ends: 9 April 2021.

Ofgem, 12 March 2021

Ofgem consultation on licence fee cost recovery principles

This consultation setting out proposed amendments to the principles including in relation to the returning of surpluses to licence fee payers.  It does not propose any changes that would affect the value of the fee charged. Consultation ends: 2 April 2021.

Ofgem, 8 March 2021

Energy Licence Modification Appeals 2021

Nine firms are seeking permission from the Competition and Markets Authority (CMA) to appeal against Ofgem’s price controls for energy companies.

Competition and Markets Authority, 5 March 2021

RIIO-2 Environmental Reporting Guidance Version 1.0

A document setting out the requirements of the RIIO-2 Annual Environmental Report and will take effect from 1 April 2021. 

Ofgem, 2 March 2021

Energy Suppliers

The Electricity Supplier Payments (Amendment) Regulations 2021 (SI 2021/235)

In force: In accordance with regulation 1(2)

This instrument makes the following changes: regulation 2 sets the rate for the operational costs levy in the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014 from 1 April 2021. Regulation 3 provides a revised figure for the settlement costs levy in the Electricity Capacity (Supplier Payment etc.) Regulations 2014 from 1 April 2021. 

Explanatory Memorandum

Emissions Trading

UK Emissions Trading Scheme free allocation review: call for evidence

A call for evidence on free allocation in the UK Emissions Trading Scheme. Within the context of climate targets, the Government is calling for evidence on how use of free allocations can better incentivise emissions reduction, and protect energy intensive, trade exposed industries from the risk of carbon leakage. Consultation ends: 23 April 2021.

Department for Business, Energy and Industrial Strategy, 17 March 2021

Participating in the UK Emissions Trading Scheme (UK ETS)

Updated guidance to add a timetable for onboarding UK Emissions Trading Registry accounts.

Department for Business, Energy and Industrial Strategy, 10 March 2021

Net Zero

What to expect from the government's new industrial decarbonisation strategy

The Department for Business, Energy & Industrial Strategy has published a new strategy outlining how industries can decarbonise in line with government targets, while also remaining competitive. The plan addresses ways to encourage low carbon options among investors and consumers, how to transform current industrial processes, and how the UK’s progress in this area can be tracked and improved. It also places emphasis on the need to avoid reducing the UK's own carbon footprint by transferring emissions abroad. Richard Goodfellow, Paul Dight and Alex Hirom, partners at Addleshaw Goddard, share their thoughts on the strategy.

Nuclear

Nuclear Decommissioning Authority (NDA) Draft Strategy for Consultation - Consultation outcome

The final outcome of this consultation presents the NDA’s current Strategy, setting out our strategic direction and long-term objectives.

NDA, 18 March 2021

Oil & Gas

North Sea Transition Deal

A landmark North Sea Transition Deal has been agreed with industry which will support workers, businesses, and the supply chain by harnessing the industry’s existing capabilities, infrastructure and private investment potential to exploit new and emerging technologies such as hydrogen production, Carbon Capture Usage and Storage, offshore wind and decommissioning.

Department for Business, Energy and Industrial Strategy and Office of the Secretary of State for Scotland, 24 March 2021

Real Estate

Energy Performance of Buildings (England and Wales) (Amendment) Regulations 2021 (SI 2021/370)

In force: 1 April 2021

These Regulations amend the Energy Performance of Buildings (England and Wales) Regulations 2012. Regulation 2 amends the fees for entering data onto the register of energy performance certificates, display energy certificates and air conditioning inspection reports.

Explanatory Memorandum

Introducing a performance-based policy framework in large commercial and industrial buildings

A consultation seeking views on the government's proposals to introduce a national performance-based policy framework for rating the energy and carbon performance of large commercial and industrial buildings. Consultation ends: 9 June 2021.

Department for Business, Energy and Industrial Strategy, 17 March 2021

Non-domestic Private Rented Sector minimum energy efficiency standards: EPC B implementation

A consultation seeking views on the government's proposed framework to improve implementation and enforcement of the EPC B target by 2030 for privately rented non-domestic buildings. Consultation ends: 9 June 2021.

Department for Business, Energy and Industrial Strategy, 17 March 2021

Renewable Energy

The Renewables Obligation (Amendment) Order 2021 (SI 2021/415)

ln force: 31 March 2021

The Renewables Obligation scheme supports the generation of renewable electricity and it is paid for by electricity suppliers. When suppliers fail to pay their share of the costs, the value of the debt is recovered from compliant suppliers in a process called mutualisation – mutualisation is currently triggered when the debt equals or exceeds a £15.4m threshold. This instrument amends that mutualisation threshold to be 1% of the forecast annual cost of the scheme for the obligation year in question (rounded to the nearest £100,000). 

Explanatory Memorandum

Future support for low carbon heat & the green gas levy: Government response to consultations

A consultation outcome document summarising the responses to two consultations on: future support for low carbon heat, beyond the renewable heat incentive; and policy options for a new levy on gas suppliers to fund support for green gas injection into the gas grid. Having considered the responses, the government intends to proceed with the launch of the Green Gas Support Scheme and Green Gas Levy.

BEIS, 17 March 2021

Consultation on the Offshore Transmission Owner (OFTO) End of Tender Revenue Stream Policy

A consultation seeking views relating to the Offshore Transmission Owner (OFTO) End of Tender Revenue Stream Policy and how Ofgem plans to further progress the review. Consultation ends: 13 April 2021.

Ofgem, 11 March 2021

Renewable Heat

Consultation: Standard Assessment Procedure (SAP 10.2): proposals for updates for heat networks

A consultation seeking views on proposals to improve the latest Standard Assessment Procedure (SAP) approach to assessing homes connected to heat networks that use recovered heat or Combined Heat and Power. Consultation ends: 10 May 2021.

Department for Business, Energy and Industrial Strategy, 15 March 2021

CHPQA proposed temporary easements due to COVID-19: summary of responses and government response

Following a consultation on a proposed temporary easement to the 2021 Combined Heat and Power Quality Assurance (CHPQA) certification process to support CHP operators impacted by coronavirus, the Secretary of State has decided to allow such Schemes to be recertified in 2021. Recertification will be based on 2019 operational performance data, or F3 design data for those Schemes that only became operational during 2020.

Department for Business, Energy and Industrial Strategy, 11 March 2021

Consultation on Domestic Renewable Heat Incentive

A consultation seeking views on proposals for the closure of the domestic Renewable Heat Incentive scheme to new applicants and accompanying reforms to future-proof the scheme. Consultation ends: 7 May 2021.

Department for Business, Energy and Industrial Strategy, 26 February 2021

Scotland

Renewable energy in Scotland

The Scottish Affairs Committee is calling for views in respect of its inquiry into renewable energy in Scotland. Consultation ends: 14 May 2021.

House of Commons Scottish Affairs Committee, 19 March 2021

Scottish Government Energy strategy: Position statement

The Scottish Government has published a position statement which provides an overview of key priorities for the short to medium-term in ensuring a green economic recovery, whilst remaining aligned to the country's net zero ambitions, in the lead up to COP26.

Energy and Climate Change Directorate, 16 March 2021

Water

Notice of Ofwat's decision to extend the requirement for Retailers to have in place a Covid-19 Repayment Scheme until 30 June 2021

In light of the continued restrictions resulting from COVID-19, some customers will continue to be impacted by business closures for some time. This notice from OFWAT extends the requirement for Retailers to have in place a COVID-19 Repayment Scheme until 30 June 2021.

OFWAT, 18 March 2021

Bioresources information consultation

A consultation seeking views on a proposal to amend the existing Direction issued to companies in relation to information they are required to provide on bioresources. Consultation ends: 15 April 2021.

OFWAT, 18 March 2021

CMA issues final decision on water price controls

A Competition and Markets Authority (CMA) report contains the price control determinations for four companies that appealed OFWAT's PR19 price control determinations.

CMA, 17 March 2021

Consultation on the business retail market and customer bad debt 

A consultation seeking views on proposals to amend the price caps in the Retail Exit Code, which apply to small and medium sized business customers who have not engaged in the market. Consultation ends: 6 April 2021.

OFWAT, 5 March 2021

Building back better with a Green Recovery Insight Series

Addleshaw Goddard's Energy & Utilities team are seeking to find a way to support our clients' as they strive to meet their own carbon zero targets. As part of this endeavour we will be releasing a series of Green Recovery; Build Back Better Insights, which will provide a synoptic snapshot into a variety of different elements of this transition phase and continue to offer an optimistic glimpse into the low-carbon future we all need. Here are the latest insights:

Hydrogen: A way for the oil and gas industry to avoid stranded assets or the solution to all our emission problems?

A deep dive into the complex world of hydrogen and take a look behind the numbers to work out how it fits into the 2050 decarbonisation policy.

Do we have the energy to decarbonise transport?

Transport is the sector with the highest greenhouse gas emissions. We have 30 years to decarbonise it but what fuels will replace petrol and diesel? How do we get the energy and the transport sectors to work together?