Collection: Energy Act

By HM Government

Updated: The Energy Act received Royal Assent on 18 December 2013. The policy briefs have been updated to reflect the change to an Act.

On Thursday, November 29th 2012, the Secretary of State for Energy and Climate Change confirmed the Introduction of the Energy Bill to the House of Commons alongside the Annual Energy Statement.

The Energy Act received Royal Assent on 18 December 2013. Details of the Bill's Parliamentary passage are available on the Parliament website.

This series brings together all of the department's documentation for the Energy Act. The publications are listed on this page.

The Delegated Powers Memorandum and the Memorandum on European Convention on Human Rights compatibility can also be found on this page.

The Energy and Climate Change Committee conducted pre-legislative scrutiny on the Electricity Market Reform provisions of the draft Bill. Their report was published on 23 July and can be viewed in full on the parliament.uk: Energy and Climate Change Committee web pages. The Government's response to this was published alongside the Bill's Introduction to Parliament, and is available below.

The Lords informal scrutiny group, chaired by Lord Oxburgh conducted pre-legislative scrutiny of the Electricity Market Reform provisions of the draft Energy Bill. The group wrote to Lord Marland, Baroness Verma's predecessor, commenting on the draft Bill.

Baroness Verma wrote to the Lords informal scrutiny group upon the Bill's Introduction into the House of Commons on 29 November 2012, to respond to their comments.

This Act will establish a legislative framework for delivering secure, affordable and low carbon energy and includes provisions on:

Decarbonisation

These provisions enable the Secretary of State to set a 2030 decarbonisation target range for the electricity sector in secondary legislation. A decision to exercise this power will be taken once the Committee on Climate Change has provided advice on the level of the 5th Carbon Budget, which covers the corresponding period (2028-32), and when the government has set this budget, which is due to take place in 2016.

Electricity Market Reform (EMR)

This Act puts in place measures to attract the £110 billion investment which is needed to replace current generating capacity and upgrade the grid by 2020, and to cope with a rising demand for electricity. This includes provisions for:

• Contracts for Difference (CFD): long-term contracts to provide stable and predictable incentives for companies to invest in low-carbon generation;


• Capacity Market: to ensure the security of electricity supply including provisions to allow Electricity Demand Reduction to be delivered;


• Conflicts of Interest and Contingency Arrangements: to ensure the institution which will deliver these schemes is fit for purpose;


• Investment Contracts: long-term contracts to enable early investment in advance of the CFD regime coming into force in 2014;


• Access to Markets: This includes Power Purchase Agreements (PPAs), to ensure the availability of long-term contracts for independent renewable generators, and liquidity measures to enable the Government to take action to improve the liquidity of the electricity market, should it prove necessary;


• Renewables Transitional: transition arrangements for investments under the Renewables Obligation scheme; and


• Emissions Performance Standard (EPS): to limit carbon dioxide emissions from new fossil fuel power stations.

A policy overview of EMR is below, but you can also view the EMR webpages for further detail.

Nuclear regulation

The Act places the interim Office for Nuclear Regulation (ONR) on a statutory footing as the body to regulate the safety and security of the next generation of nuclear power plants. This includes setting out the ONR's purposes and functions.

Government pipe-line and storage system

The Act includes provisions to enable the sale of the Government Pipe-line and Storage System (GPSS). This includes providing for the rights of the Secretary of State in relation to the GPSS, registration of those rights, compensation in respect of the creation of new rights or their exercise, and for transferral of ownership, as well as powers to dissolve the Oil and Pipelines Agency by order.

Strategy and policy statement

The Act improves 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.

Consumer Protection

• to set a limit on the number of energy tariffs offered to domestic consumers; require the automatic move of customers from poor value closed tariffs to cheaper deals; require the provision of information by suppliers to consumers on the best alternative deals available to them from them


• to allow Ofgem to extend its licence regime to third-party intermediaries, such as switching websites


• to provide a new enforcement power for Ofgem to require energy businesses that breach gas or electricity licence conditions, or other relevant regulatory requirements, to provide redress to consumers who suffer detriment as a result of the breach


• to amend the Warm Homes and Energy Conservation Act to propose a new target for fuel poverty that would be set through secondary legislation

In addition:

• a provision to allow the FITs scheme to include community energy projects with a capacity of up to 10MW (an increase on the current ceiling of 5MW)


• to provide an exception to the prohibition of participating in the transmission of electricity, during testing in the commissioning period of Offshore Transmission connections, constructed by or on behalf of developers also constructing an offshore generating station


• a provision that enables DECC to charge fees for providing energy resilience services in the event of a disruption, or threatened disruption to energy supplies


• to extend the existing regime for recovering from industry the Department's external adviser costs relating to the Waste Transfer Contract and any agreement reached under Section 46 of the Energy Act 2008. This will also extend the existing cost recovery regime to cover the period between notification by an operator of its intention to submit a Funded Decommissioning Programme and formal submission.


• a provision to enable the Secretary of State to require private landlords to provide smoke and/or carbon monoxide alarms.