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Draft Energy Bill (Pre-Legislative Scrutiny)

Volume 545: debated on Tuesday 22 May 2012

I am pleased to be publishing a draft of the Energy Bill today, in order for pre-legislative scrutiny to be carried out on it.

The draft Bill includes measures necessary to reform the electricity market to deliver secure, clean and affordable electricity.

At the heart of our Electricity Market Reform (EMR) measures are feed-in-tariffs with Contracts for Difference (CFDs), long-term instruments which will provide stable and predictable incentives for companies to invest in low-carbon generation. CFDs are more affordable than alternative incentives and will mean a better deal for consumers. Through the work on Final Investment Decisions (FID) Enabling we are committed to working with developers to enable some of this investment to come forward in advance of the CFD regime coming into force, and the Bill contains measures to support this process. This will be complemented by a capacity market that will, if required, provide security of electricity supply by ensuring sufficient reliable capacity is available. Measures relating to conflicts of interest and contingency arrangements will ensure that the system operator which will deliver these schemes is appropriate. Renewables transitional measures will ensure that existing investments under the renewables obligation remain stable. Finally, an Emissions Performance Standard (EPS) will limit carbon dioxide emissions from the most polluting fossil fuel power stations by setting appropriate standards for all new fossil fuel powered generation. Taken as a whole, EMR will enable large-scale investment in low-carbon generation capacity in the UK and deliver security of supply, in a cost-effective way.

In addition to EMR, the Energy Bill will also improve regulatory certainty by ensuring that Government and Ofgem are aligned at a strategic level through a Strategy and Policy Statement (SPS), as recommended in the Ofgem review of July 2011.

The Bill also ensures that the Office for Nuclear Regulation will be fully able to meet the future challenges of regulating the nuclear industry, as the first new power plants since the 1980s are built.

Finally, the Bill contains provisions that will enable the sale of the Government Pipeline and Storage System (GPSS). The Under-Secretary of State for Defence, my hon. Friend the Member for Mid Worcestershire (Peter Luff) who has responsibility for equipment, support and technology, is laying a separate written ministerial statement today.

I am confident that measures contained in this Energy Bill will enable us to keep the lights on, bills down and air clean. I am pleased to commend it to the House today for PLS and will look forward to the publication of the Energy and Climate Change Select Committee’s report.