UK: SSE Salutes Select Committee’s Report

SSE welcomes the Select Committee’s report, which examines the views of an extremely wide range of stakeholders, including financiers, NGOs, consumer groups and utilities, as an important contribution to the current electricity market reform (EMR) debate. The Report’s conclusions and recommendations, the vast majority of which SSE supports, illustrate the level of concern that many organisations have with the Government’s current direction of travel.

SSE shares the Committee’s concerns that problems with the current Contract for Difference (CfD) proposals could make them unworkable. In particular SSE agrees with the Committee that:

• The EMR Impact Assessment should be comprehensively revised in order to analyse and quantify the new risks and costs which have been introduced as a result of the Government’s proposals. Without this revision, SSE believes that Ministers and Parliament will be trying to make decisions based on out-dated and flawed evidence.
• The ‘multi-party’ payment model and contractual arrangements should be scrapped, and that a counterparty model which is underwritten by Government would be the best way to instil investor confidence and reduce financing costs.
• The Government should release details of how the Levy Control Framework will work in practise, and how it will impact on CfD allocation, in order to provide developers with longer-term certainty.
• If outstanding questions regarding the CfD are not answered by the autumn, or the EMR timetable is further delayed, then it may be necessary to consider pushing back the closing date for the Renewables Obligation from 2017 and/or keep open the option to convert the RO into a Premium Feed-in Tariff.

SSE hopes that the Government will listen to, and consider, stakeholders concerns as closely as the Committee has when it looks again at its package of EMR reforms. If it does this then SSE shares the Committee’s view that there is still scope to revise the proposals into a workable package.

[mappress]

Offshore WIND staff, July 25, 2012; Image: SSE