Spring Budget 2017: Energy updates
On the 8 March 2017 Chancellor Philip Hammond delivered the Government’s Spring Budget – the announcement included some key points for energy detailed below.
Levy Control Framework (LCF) – it was anticipated that the Government would provide details of the LCF into the 2020s in the Spring Budget, however the announcement stated only that the framework would be replaced by a ‘new set of controls’ on low carbon subsidies. These are to be set out in detail later in the year.
Carbon prices – there was some expectation, particularly in light of the Brexit result and our involvement with the EU Emissions Trading Systems (EU ETS), that further details on carbon pricing would be announced. However, the Treasury only confirmed that, starting in 2021-22, it would target a total carbon price and set the specific tax rate at a later date to help businesses know the overall price they will pay. Further details of carbon prices into the 2020s will also be set out in the Autumn Budget.
Disruptive technologies – a new Industrial Strategy Challenge Fund is to be set up to support collaborations between the UK’s science base and business. In order to kick start the development of disruptive technologies “that have the potential to transform the UK economy”, an initial investment of £270m will be made during 2017-2018. The Budget announced that the first wave of development will include the design and manufacture of batteries that will “power the next generation of electric vehicles” alongside artificial intelligence and robotics.
Retail – the Treasury reaffirmed the Government’s commitment to improving retail markets for consumers and to publish a green paper examining markets that are not working efficiently or fairly. Legislation will be brought forward that will allow consumer enforcement bodies to ask the courts to order civil fines against companies that break consumer law. Consideration is also to be given to how terms and conditions can be made easier and clearer for consumers to understand – this will build on a call for evidence on terms and conditions later this year.
Project Nexus update
Xoserve provides a central service for the Gas Transporters in Britain and manages all of the key data associated with approximately 22 million gas supply points nationwide. An ageing and restricted system called UK Link currently underpins processes such as settlement and meter registration for gas supply points. However, Project Nexus will facilitate the replacement of UK Link with a new system able to allow improvements to be made to a number of processes upon implementation on 1st June 2017.
As has been previously communicated in earlier bulletins, the industry will experience an unprecedented level of change during the transitional period. This means that customers will experience longer gas registration lead times than normal due to no communication being allowed between suppliers and Xoserve for a number of ‘non-effective’ days. An industry code modification to facilitate the transitional switching arrangements has now been rubber stamped by Ofgem and Opus Energy is in the midst of discussing our potential communications strategy for this period.
The key impacts of the transitional period are that, in some cases, the objections window will be reduced to a maximum of 2 working days for a short period (from the usual maximum of 7 working days) as the days vary. An indicative maximum registration period of 23 calendar days for supply registrations will be initiated leading up to and during the ‘non-effective’ period. Normal activities are expected to resume for registrations initiated from 6th June 2017 as the industry returns to business as usual and a minimum registration period of 14 calendar days.