ENA Bulletin 21 June

Issue 296: Wednesday 21 June 2012

  • ENA hear from Minister and Richard Ottaway on metal theft...

  • ... As Scottish Government announce metal theft reform...

  • ... And ENA brief local authorities on metal theft

  • ENA host dinner with Energy Minister...

  • ... As he talks down gas heating but Greenpeace talks it up

  • Draft Energy Bill – is this the end of the road?

  • Birthday Honours for Gas and electricity industry people

  • Brussels update

  • Forthcoming events organised and/or supported by ENA

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ENA hear from MP who will call time on metal thieves...

Mr Ottaway’s Scrap Metal Dealers Bill was introduced in the House of Commons on Wednesday 20 June and the second reading will be on Friday 13 July. We expect the full text sometime before then and are pleased that it will include all the measures set out by ENA and other industries. Specifically:

  • A robust licensing regime that is funded by the industry.

  • Stronger Local Authority and Magistrates powers.

  • Tougher police powers to tackle those who break the law.

  • Strict rules on proof of ID for the seller and the metal.

Speaking at the All Party Parliamentary Group on Combating Metal Theft, that morning, Lord Henley, the Home Office Minister for Crime Prevention and Anti-social Behaviour, outlined the efforts so far.

In particular he highlighted the work of the British Transport Police and other police forces that have made considerable progress to disrupt the crime. Speaking on legislation he explained that government had “always thought more could be done” in this area and welcomed Richard Ottaway’s Private Members Bill.

Lord Henley also explained that commencement of cashless transactions as part of the LASPO Act was still being discussed. Despite suggestions that the gap between commencement and the new Scrap Metal Dealers Act should be smaller, both victims and Parliamentarians were keen that unnecessary delays were not acceptable. ENA made the point that this was not a time for dealers to look at how long they can trade in cash but to focus on preparing for a cashless system now.

Outlining the principles of his Bill (above), Mr Ottaway set out what he wants to be a new regulatory regime for the industry and said there was a strong head of steam amongst all MPs. The Environment Agency had also agreed in principle to administer a national register of scrap metal dealers, which alongside Local Authority enforcement would be funded by the license fee.

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... As Scottish Government announce metal theft reform...

As the momentum for change continues, Scottish Justice Secretary Kenny MacAskill announced key reforms to the scrap metal law in Scotland on Wednesday 6 June. In the future, metal dealers with an annual turnover of £1 million or less will require a licence. This raises the exemption limit from the current level of £100,000. The Scottish Government is also likely to remove the exemption entirely to bring all dealers into the scheme and will work with the industry to ensure these plans are practical.

Mr MacAskill, who ENA briefed last December, said they would also “take action on cash payments for metal to remove the attraction of easy 'ready cash' payments”.

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... And ENA brief local authorities on metal theft

Last Friday (15 June) ENA was speaking alongside Richard Ottaway, the MP behind the Bill, to finally reform the scrap metal industry. It gave us the opportunity to back details of the Bill that Mr Ottaway was able to disclose as we both addressed Councillors at a Conference at the Local Government Association. Mr Ottaway had first spoken about his Bill at an ENA Well Connected event at Lancaster House on Monday 28 May.

We strongly welcomed the announcement from Mr Ottaway that his Private Members Bill will introduce a “robust regime to clamp down on unscrupulous scrap metal dealers”. In recent years, with the increase of metal theft, the energy networks have reached an average peak of 21 incidents each day. There have been dozens of deaths; the most recent fatality being of a 16-year-old boy was just a few weeks ago and hundreds of serious injuries. Power surges have also caused hundreds of thousands of pounds worth of damage to electrical appliances in homes and caused fires.

Speaking after Mr Ottaway at the conference, ENA’s Tony Glover said “there has been a long campaign to bring about a change in the law and this is a hugely positive step. Mr Ottaway has shown determination with his bold and essential proposals. He is absolutely right to say that legislation is the only sustainable, long-term solution and we look forward to seeing the full details of his Bill next week.

The levels to which metal theft have risen with the loss of life, the risk to innocent people and the cost to society must be stopped and we are confident that if implemented in full Mr Ottaway’s Bill will give enforcement bodies, police and industries the tools to tackle this dangerous and destructive crime.”

Meanwhile, MPs debated the issue on Monday 18 June as Graham Allen Labour MP for Nottingham North (ironically Richard Ottaway’s old seat) led a debate on the issue. He said metal theft was “destructive, distressing and expensive. It is poorly legislated for, and we need to put that right”. He paid tribute to Graham Jones MP, who has been working with ENA on this issue for nearly a year. Mr Allen highlighted a very recent attack on the electricity network where several kilometres of overhead power cable was stolen in East Lancashire by organised criminals, which had only occurred in the past 7 days.

Responding for the Government, Home Office Minister James Brokenshire said that the banning of cash payments was “a UK first”. He said they hoped to “help to ensure through collaboration” that Richard Ottaway’s Bill “delivers a stronger and more effective licensing regime for the scrap metal industry, thereby replacing the outdated 1964 Act”.

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ENA host dinner with Energy Minister...

On Tuesday 19 June ENA hosted a dinner for Energy Minister Charles Hendry MP. It gave the network companies an excellent opportunity to focus on network related issues. A range of matters were discussed as energy network companies embark on greatest energy transformation since the 1960s.

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... As he talks down gas heating but Greenpeace talks it up

Recently, the International Energy Agency described ours as the “golden age of gas”. A bold claim, but one that, seemingly the UK Government only part agrees with. Addressing MPs at a meeting of the Parliamentary Renewable And Sustainable Energy Group (PRASEG) Charles Hendry said the “the economics have changed” on gas. However, he did not see a major role for gas in domestic heat into the future.

Responding to a question from ENA about the Greenpeace view that gas heating was certain for “some time to come” he said he was more “enthusiastic” about non-gas heating. The Minister did acknowledge the role for biogas but apart from that he “didn't see a major role” for gas space heating. He said a key driver was the gas price. Rising prices will make electricity more attractive he stated. This contrasted with the view from Dr Doug Parr from Greenpeace who said heating would be dependent on gas for some time to come.

Having said this he did see a key role for gas. ENA were at the forefront of this renaissance of gas policy with the Redpoint report back in November 2010. The Minister said it would be a “dereliction of government not to look at the future role again” for gas. The Treasury have recently taken a lead on this issue and a Gas Generation Strategy will be published in the autumn to ensure more gas plants are built.

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Draft Energy Bill – is this the end of the road?

This was supposed to be the time when energy policy would be certain. The Electricity Market Reform proposals are set to be enshrined in an Energy Bill that will become law next year. This will provide the as yet elusive ‘policy certainty’. But will it? There are a lot of known unknowns. The priority of climate change has suffered somewhat and although commitments to a sustainable energy future remain strong, the necessity for affordable security is stronger.

The Bulletin has looked at what the Shadow Energy Secretary Caroline Flint MP has been saying. We reported a couple of months ago that she was shifting her message. Departing from that of her predecessor, the man formerly in charge of DECC and now leader of her party. She has been moving the narrative away from climate change to where she feels the public have their concerns.

An interesting insight into her thinking came in an interview in this week’s House Magazine (the trade magazine for UK Parliamentarians). When Caroline Flint moved last October to lead Labour’s energy team, she says her challenge was “trying to think what is the sort of, ‘Flint story’ that I can bring to this and help it along”. She says her mission is to “refine whatever our product is and hopefully the public will like it, will buy it”. She has developed a message and, as reported by the Bulletin before, the slogan is “bills, not bears”. What she is trying to say by this is that the public will support climate change policies if they think it affects their livelihoods – the pressing concern of melting polar ice caps has lessened with economic hardship. Clearly a very different message from the hug a husky story developed by Mr Cameron when in Opposition. Different messages for different times perhaps.

Might Ms Flint be onto something though? She says “if you ask the public about the environment and climate change, it’s never in the top three, I think it barely makes the top ten. What I wanted to try and do is bring it more into the economic discussion about jobs and growth. In our team, whatever we discuss, wherever we discuss it, we come back to the point: How does that effect prices, how does that effect jobs, how does that effect security? And if we can’t answer those questions then we’re not having the right discussion.”

It has become common place now that in meetings in private and public, DECC Ministers are interested in how any given policy change saves money or ensures greater energy security or stimulates the economy. Low carbon targets are setting the parameters but within that there is an underlying affordability, security and growth agenda shaping the policy detail.

In an interesting development yesterday the Deputy PM Nick Clegg said on the Today Programme that all the evidence suggested that renewable technologies needed "a little bit of support in their early years", but that he did not believe that "subsidies are something which are sort of chiseled in stone". He said, "my own view is that I don't think anyone should sort of be fetishistic about subsidies. If you can support industries like offshore, indeed onshore and offshore wind and other forms of energy without any start up subsidy, all the better."

 

That is at the heart of the smarter networks agenda. Low carbon policies, underpinned in a cost effective way, which secure energy supply. That is what the interconnector debate, initiated by Charles Hendry, is about also. The Prime Minister highlighted it with his major energy partnership with Norway, which was signed on Thursday 7 June. The headline message it brings is “secure energy and jobs”.

The new approach on gas is about security and probably, eventually, affordability too. Speaking at the PRASEG event last week Mr Hendry said he didn’t think we will see shale gas exploited in the UK any time soon. The growth in the US will not be repeated here he said as the license laws for drilling are different to creating commercial drivers. However,it is a “global game changer” he acknowledged.

The socio/economic drivers that chart the course for energy policy may be pushing it in new directions. If so this Energy Bill is almost certainly not the last one we will see in the near future.

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Birthday Honours for Gas and electricity industry people

The Queen’s Birthday Honours List saw recognition for hard work in both the electricity and gas sector. There was an OBE for UK Power Networks Director of Operations Patrick Clarke, who has been leading the fight on metal theft within his company. He received his honour for services to Black Asian and Minority Ethnic Youth Mentoring.

There was an MBE for Chris Bielby, Chairman of both the Gas Industry Safety Group and the Gas Safety Trust. In his day job he is Director of New Business, Scotia Gas Networks. He received his honour for services to Gas Safety.

There was also a Knights Grand Cross of the Order of the British Empire (GBE) for Sir John Parker who was until last year Chairman of National Grid.

Finally, the Vice-Chancellor of the University of Strathclyde is to be knighted for services to education, engineering and the economy. Professor Jim McDonald is known to everyone in the energy sector as an expert on electricity supply, power networks, distributed generation and new/ renewable energy.

Congratulations to them all!

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Brussels update

Energy Efficiency Directive – politicians agree

MEPs, Member States and the European Commission have finally agreed a political deal on the terms of the Energy Efficiency Directive. The text of the new Directive will be formally voted on by the Parliament in September, and is likely to come into law in October. Eighteen months will be allowed for Member States’ implementation, e.g. 2014.

ENA welcomes the efficiency principle underlying the new Directive, but care will need to be taken when these legislative proposals are transposed into UK law and then implemented, taking into account other, potentially conflicting energy policy priorities, to avoid unintended adverse consequences for the operation of UK electricity and gas networks. For example, maximizing renewable generation capacity factors, and maximizing network utilization factors to accommodate low carbon technologies will not necessarily be compatible zero carbon losses on the networks.

Of course the obligation towards energy efficiency must be implemented with regard to the whole energy system, not just the networks, and recognize that network energy efficiency (energy out divided by energy in) is a lower priority to that of the overall decarbonisation of electricity production, and will often be in conflict. 

Main points of the new Directive

  • Member States must establish national end-use saving schemes in order to require energy (distribution and/or retail) companies to realise 1.5% energy savings each year among final customers. This annual saving can be achieved through a series of different measures.

  • Emissions Trading Scheme: a large part of the efforts that industries already make under the EU ETS will now be accounted for in the yearly obligation.

  • Early action: Member states will be able to include “early action" in their energy savings goals, allowing them to credit savings measures launched before this EU law comes into force, for example the UK’s Green Deal.

  • Proposals re metering and billing: where final customers do not have smart meters, Member States shall ensure, not later than 1 January 2015, that billing information is accurate and based on actual consumption, for all the sectors covered by this Directive, where this is technically possible and economically justified.

  • Member States must adopt national heating and cooling roadmaps to develop the potential for high-efficiency cogeneration and efficient district heating and cooling. They shall also implement authorisation criteria that ensure that installations are located in sites close to heat demand points where a cost-benefit analysis proves positive. All new electricity generation installations and existing installations that are substantially refurbished should be equipped with high-efficiency CHP units, if cost-effective. 

  • Member States should establish, on the basis of objective, transparent and non-discriminatory criteria, rules governing the bearing and sharing of costs of grid connections and grid reinforcements and for technical adaptations needed to integrate new producers of electricity produced from high efficiency cogeneration.

  • Access to the grid system for electricity produced from high-efficiency cogeneration, especially for small scale and micro-cogeneration units, should be facilitated

  • Conditions for and access to demand response should be improved, including for small final consumers. Taking into account the continuing deployment of smart grids, Member States should ensure that national energy regulatory authorities are able to ensure that network tariffs and regulations incentivise improvements in energy efficiency and support dynamic pricing for demand response measures by final customers. Market integration and equal market entry opportunities for demand side resources (supply and consumer loads) alongside generation should be pursued. In addition, Member States should ensure that national energy regulatory authorities take an integrated approach encompassing potential savings in the energy supply and the end-use sectors.

Cyprus Presidency: From 1 July 2012 – 30 December 2012

The Cyprus delegation has presented the incoming Presidency's work programme in the energy sector. Cyprus officially takes over from Denmark on 1 July.

No doubt the Cypriot delegation will be heartily relieved that the Danes secured their successful outcome for the Efficiency Directive, very much at the last minute. This will allow Cyprus to focus their attention energy security, and specifically on the legislative proposals on energy infrastructure, and EU funding of key infrastructure projects, as well as on the new Commission communication on renewable energy published on 6 June.

Of course the real focus of EU political discussions for the remainder of this year will be identifying solutions to the current financial and economic crisis. Cyprus has its own financial concerns, and has already asked for an EU bailout thanks to its exposure to Greek debt.

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