July promises to be a busy month in Whitehall Place, the home of the UK’s Energy and Climate Change Department. Unfortunately, however, despite the prospect of a flurry of activity it seems as if all key decisions will still be left on hold.
The Department has said that it will publish the first part of the British Geological Survey report on shale gas prospects in the UK in July. It will also publish some form of shadow, indicative pricing framework for the various forms of energy under the Electricity Market Reform proposals.
Both are profoundly unsatisfactory. Why is the BGS survey being published in parts? Why can’t we read the whole of this authoritative study by a completely independent and well respected body? It was completed last year, is cautious and makes no attempt to estimate what proportion of the resources it identifies can be developed commercially. The partial publication can only confuse the issue. As of now it is not clear whether the Department will publish a response to the BGS survey showing how shale gas development can fit into the UK’s future energy plans.
They will argue that without proper drilling and appraisal work it is impossible to know the impact. But if the BGS confirms that there is clearly a resource base, and if work clearly needs to be done, how can the Department push ahead with plans which leave little room for shale gas.
The shadow pricing regime will also satisfy no one. Michael Fallon, the Energy Minister drafted into to rescue the department, used to be a Director of a number of companies such as Ballantyne Fitness Ltd and Quality Care homes. Would those companies have made investments without having a clear idea of the prices they could charge? Would they have invested on the basis of “shadow” prices which were subject to challenge and intense lobbying? Of course not. The major energy companies such as Centrica which are ready to invest in new power stations can’t invest without confidence in the price regime. They were promised transitional arrangements – i.e. a price framework which would bridge the gap until long term market reform was completed. The Department has dismally failed to produce those arrangements. Why?
In addition to these two planned announcements the Department will be under real pressure to conclude the negotiations with EDF on new nuclear. Month after month goes by and nothing happens. Every month lost increases the costs and delays the moment any new nuclear will come on-stream – or, if the price really is too high, the moment at which the hard decision is taken to say no and to go for an alternative source of supply.
And then the Department is rightly going to face some very hard questions on the state of its major projects. DECC has 13 major projects. 12 of these were exempted from publication and open scrutiny by the recent Cabinet Office review – far more than from any other government department.
We need to know more about the status of the Green Deal for instance – a huge green elephant of a project which has had minimal take up. And about the future of nuclear waste disposal. And about electricity market reform itself. In each case how much public money has been spent and to what end?
The Department has had a soft time from the Energy Select Committee. But that may change with the departure of Mr Yeo. There is a huge agenda for a strong committee to tackle. I hope we will see a tough Chairman appointed (with no outside interests) who is capable of interrogating not just DECC but the Government as a whole on the reasons why energy policy is characterised by drift and indecision which are discouraging investment costing jobs and creating quite unnecessary risks around future security of supply.
In the days of Samuel Pepys Whitehall Place used to be the home of the Royal Plouterer – a grand honorific title attached to someone close to the Court who received some form of pay for doing very little. It seems as if nothing has changed.