The Energy Security Bill (now known as the Energy Bill 2022) had its second reading in the UK House of Lords this week.
On a day when temperatures outside the chamber exceeded 40 degrees Celsius for the first time, the Lords discussed topics including the challenge of climate change and how to reduce the UK's dependency on global fossil fuel markets.
The new Energy Bill is a wide-reaching Bill that amends various other energy-related Acts (only an Act of Parliament can amend another Act) and is the largest piece of primary legislation concerning energy in the UK since the Energy Act 2013.
It follows on from various UK energy policy papers and consultations, the most recent being the British Energy Security Strategy (BESS) published in April 2022, and before that the Ten Point Plan.
The Bill will enable several reforms that needed primary legislation (i.e. a new Bill/Act of Parliament) to bring about. Given the current political situation in the UK, it is good that the Bill is already making its way through the legislative process and should be passed later this year. This Insight lists some of the key reforms that the Bill enables. We will publish future Insights that go into some of these in more detail.
The Bill is a chunky piece of legislation: 243 clauses in 13 parts, plus 19 schedules. It is based on three key pillars:
- Leveraging investment in clean technologies
- Reforming the UK's energy system and protecting consumers
- Maintaining the safety, security and resilience of the energy system across the UK.
Delegated powers
The Bill contains a lot of general powers to make regulations, which will contain the detail. The Government’s delegated powers memorandum argues that the delegated powers in the Bill need to be considered in the context of the legislative energy landscape:
"The legislative landscape covering electricity, gas and nuclear power in the UK is highly complex and technical in nature, which inevitably means it is appropriate that a certain amount of technical detail should be left to secondary legislation. It is the department’s view that the delegated powers in this bill should be seen in that context"
The powers are grouped into the following categories:
- Powers providing financial support to, setting targets for, or in other ways helping establish new industries and technologies.
- Powers supporting the establishment of a new ISOP.
- Powers that support the creation of new licensing activities.
- Powers which enable amendment or modification of existing legislation or documents.
- Powers that support the development of new regulatory regimes.
So, as ever, the devil will be in the detail but the Bill does provide the overall framework.
What's missing?
The Bill is pretty wide-ranging and plugs a lot of gaps that we were hoping it to, including a definition of energy storage, a MPI licence, the CATO regime and the heat networks regulatory framework. There are some things it does not cover, including imposing a 'net zero' duty on Ofgem and nothing on energy efficiency, which seems like a missed opportunity. Overall, this Bill gives the Government a range of broad powers but the detail will be left to technical regulations at a later date. So for now, there is some more certainty for investors to start looking at future investments whilst we wait for the detail.
