Energy Bill [Lords]

Debate between Alan Whitehead and Chris Heaton-Harris

Wednesday 20th April 2016 Commons Chamber

[Chris Heaton-Harris]

I know the hon. Gentleman said that he had a bit of trouble with conventions, and so, obviously, do some Members of the House of Lords. I am trying to remind them of a long-standing tradition and convention in this place, which is that when a party has a manifesto commitment to enact legislation, that legislation should not be overturned by those who are unelected down the other end of the corridor. If we consider who tabled the amendments and voted for this message to be sent to the Commons, we see a whole list of former MPs who lost their seats because of the manifesto that they are now trying to overturn from an unelected place.

I was involved with this manifesto pledge through to the point of delivery, and I sat on the Energy Bill Committee. I am pretty sure that I know what our manifesto pledge was, as did those who voted for it in my constituency—it was on my leaflets and plain for all to see. I wish to send a message to those down the other end of the corridor that they are dabbling with democracy. They are not just fighting for the principle of a grace period for six wind farms; they are determinedly fighting against a clear manifesto pledge by a governing party.

[Dr Whitehead]

I wonder whether the hon. Gentleman had in his election leaflet details of the grace periods that would have been put in place as a consequence of the manifesto commitment. If those details were not in his leaflet, does he agree that the question of grace periods is not about the manifesto commitment, but about how that commitment might be made more palatable, as far as the transition is concerned? That is what we are debating today.

Energy Bill [Lords]

Debate between Alan Whitehead and Chris Heaton-Harris

Monday 14th March 2016 Commons Chamber

[Chris Heaton-Harris]

It is as predictable as the wind. We know which direction the wind will come from and how fast it will be, which means we can predict a zone that will be affected by amplitude modulation on any given day. So yes, we can predict it.

I ask the Minister not to give up on the changes to the renewables obligation, which were part of a manifesto commitment, and to hear our plea about amplitude modulation. I have some concerns about the report she has commissioned from her Department and would like it judged against the evidence I have given her. Had the wind industry behaved more pragmatically and sensibly a few years ago, we probably would not be in this position. I am known for my views on this subject, but I know that there are sensible developers of wind technology who try to do their best for the local communities in the areas in which they install turbines. Unfortunately, I do not have an example of that in my constituency. It might be that the wind industry has woken up to this issue after the horse has bolted.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I rise to speak to our amendments 24 to 33 and 40 to 46, which, although standing individually, form a collective whole and refer to successive amendments the Government made to the Bill in another place in Committee to bring forward the closure date of the renewables obligation from 31 March 2017 to 31 March 2016. Our amendments would move that date and those of the various grace periods to 1 March 2017. They would therefore bring forward the closure date by one month, rather than one year, as is the present proposal.

I have some fears about the robustness of the present closure date in the face of the Bill’s passage. We are discussing a closure date that is very close to the day on which we are actually discussing it. The passage of the Bill, given that it came from the other place in the first instance, will have to finish in the other place shortly. The fact that the closure date before us is just a fortnight or so away from today creates considerable difficulties for the closure of the RO itself. It is not the case that we are discussing something that does not exist that can be brought into existence under legislation. We are discussing something that not only exists but, if we do nothing by way of legislation, will continue to carry on until 31 March 2017. We are discussing something that is in the legislation already, in that there is a specific mention in the Bill that the RO comes to an end on 31 March 2017, so if nothing happens to stop the RO carrying on, it will carry on until that date. In a sense, then, we have just one go in this place at changing the date in the legislation. If the Bill continues its passage through Parliament after the closure date has come into being, we will be dealing with retrospective legislation.

Energy BILL [ Lords ] (Seventh sitting)

Debate between Alan Whitehead and Chris Heaton-Harris

Thursday 4th February 2016 Public Bill Committees

[Chris Heaton-Harris]

That is what my wife says.

I believe that new clause 5 is incompatible with the Government’s stated objective of affordable decarbonisation. I want to take the opportunity to ask the Minister how the Government are progressing towards their goal of having a truly competitive single pot for each of the contract for difference auctions, and how the Government will try to encourage investment in new, consistent and dispatchable renewable energy.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

As we heard this morning, new clause 12 approaches similar aims, though in a slightly different way, from the clauses put forward by the hon. Member for Aberdeen South this morning. It concerns the allocation rounds for contracts for difference and the extent to which they should be held on an annual basis.

I appreciate that the Government have indicated in principle that there will be further allocation rounds, although we are still waiting to see what might be in them. For example, would onshore wind be included in allocation rounds in future? In the context of the levy control framework, which I am pleased to see is now being investigated by the National Audit Office, we are not sure whether there will be any substance in those allocation rounds. We are not sure whether there are any allowances in the pot that can be put into the allocation rounds in order to make them realistic for operators to bid into them.

We also understand that the process for bidding in allocation rounds means, as we heard this morning, that what comes out as the auction strike price will not be the same as the allocated strike price originally announced for various different categories of renewables. While that suggests that there should be an annual allocation round in each year where the UK is not on target to meet the 2020 EU renewable energy target, what those allocation rounds actually cost would be a variable factor. The suggestions that went around a little while ago on the possible emergence of subsidy-free CfDs could mean that the allocation rounds could be held with little or no effect on the levy control framework. Can the Minister say whether subsidy-free CfDs are a current question in her Department? If there are future allocation rounds, might they be a part of the allocations? If no clear answer is forthcoming this afternoon, perhaps it would be easiest for her to consult her departmental adviser who, I know, had a substantial hand in advancing the idea of subsidy-free CfDs before he became an adviser. I am sure his expertise on this issue could be put to good use on CfDs.

The issue with holding allocation rounds annually is not necessarily or even reasonably disposed of by the idea that this is simply about keeping control of how much money goes out under the levy control framework, because there are ways to hold an annual contract round without overthrowing those arrangements. The new clause would ensure that the issue of frequency of allocation rounds was about what it should be about—the extent to which CfDs drive the deployment of renewables towards the goal of achieving our renewable energy targets. That has been publicly stated as one of the goals behind the working of the levy control framework. We have not heard about this yet, but there is also the possible allocation of further targets after 2020, so the proposal could continue to drive forward the deployment of renewables and ensure that those targets were reached.

We have also discussed what we mean by reaching the 2020 EU renewable energy targets. We have emphasised that that means the discharge of the obligatory target agreed by the UK for the provision of 15% of energy from renewable sources by 2020. In turn, that means that the sub-targets that were set in the UK but nevertheless contribute towards the overall EU target should themselves be either on target or be underpinned by other areas being on or above target. The letter from the Secretary of State to other Departments in October set out precisely what that means and I trust that on this occasion the Minister has a copy easily to hand, which would be a good step forward. It states that the trajectory towards reaching those EU targets “increases substantially” after 2017-18 and

“currently leads to a shortfall against the target in 2020 of around 50 TWh (with a range of 32 - 67TWh) or 3.5%-points (with a range of 2.1 - 4.5% points) in our internal central forecasts (which are not public).”

So the Secretary of State emphasises that the trajectory and the shortfall are not public but goes on to say:

“Publically we are clear that the UK continues to make progress to meet the target.”

I trust that the Minister, now having a copy of that letter, will agree that that is an accurate depiction; the Secretary of State was clear that we are on target not to be on target as far as EU 2020 goals are concerned. Although the fact that we are on target not to be on target has not been made public, nevertheless, that very clear conclusion stems from departmental trajectories and is robust in terms of what the departmental modelling represents.

I take that internal observation as the starting point for this amendment and I hope that the Minister will confirm it to be the case. Secondly, I hope she will be able to change the status of those internal central forecasts, on which this is based, from not being public to being public. That would be very helpful to our discussions in the longer term. The idea that the UK is not on target, overall, to meet the EU 2020 renewable energy targets—and, as the letter makes clear, it is largely not on target because of factors relating to quite substantial failures in heat and transport—suggests, among other things, that in order to make sure that the Government are on target, other areas perhaps need to over-perform, and among those would be those projects which would be in line for contracts for difference through the allocation auctions.

Of course, I remind the Committee that that is not about onshore wind or renewable obligations, it is about a variety of renewables that may qualify for those contracts for difference—biomass, offshore wind, other forms of renewable energy which, together, could make a contribution to getting to the target by overachieving in that area. So it is a mechanism, essentially, to ensure that we are straining every sinew to get to that EU target and using the devices that we already have available to us to get there through a competitive process that ensures best value for money in the process. I therefore commend this amendment to the Committee and trust that the Minister will take it on board.

Energy BILL [ Lords ] (Fifth sitting)

Debate between Alan Whitehead and Chris Heaton-Harris

Tuesday 2nd February 2016 Public Bill Committees

[Chris Heaton-Harris]

As I said on Second Reading, we need to evolve our planning system so local communities benefit very much from any developments. I cited the French system which my fellow Eurosceptic colleagues will be very uptight about. There is a better way of dealing with planning when it comes to helping local communities to decide whether to take onshore wind, fracking or other things, but I do not think we are there yet.

To return to what happened in my constituency with onshore wind, with which this part of the Bill deals, we launched a very simple campaign. We got on board, some Members will recall, the former Energy Minister, my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes), who said, “Enough is enough. We are going to make changes.” I thought that was a good signal that the Conservative manifesto might have something fairly solid on this. The following Energy Minister, my right hon. Friend the Member for West Suffolk (Matthew Hancock), said on the Floor of the House on 6 March 2015—a date that in my mind definitely came before the General Election campaign:

“We have made it absolutely clear that we will remove onshore wind subsidies in the future, and that the current 10% that is in the pipeline for onshore wind is plenty.”—[Official Report, 6 March 2015; Vol. 593, c. 1227.]

I thought that was probably enough of a signal as to where our manifesto was going. Forget the petitions, the questions, the debates and all the other points that were made on the Floor of the House. I was very pleased when I saw the Conservative Party manifesto.

If Opposition Members choose to dance on the head of a pin about whether “new public subsidy” refers to renewables obligation certificates or anything else, perhaps that allows me to talk about things in the second part, which we have all agreed. Let us talk about the way that local people can have the final say on these matters. Let us talk about something the Committee has agreed on previously—how we decommission big energy projects.

It cannot be said that these are not big energy projects. Supposedly, decommissioning is a given—the costs are being set aside when it comes to the North sea—but it is not yet part of the Bill when it comes to onshore wind. The Committee debated earlier the jobs, the supply chain, recycling, the sites that are properly and safely returned to nature—all phrases used by the hon. Member for Southampton, Test about the decommissioning of oil and gas. Yet we currently have a system in place that simply does not allow for decommissioning bonds or any way to ensure that the developer ends up paying to decommission a huge chunk of metal being stuck in the countryside. If we are talking about making sure that local people have the final say on wind farm applications, perhaps we should allow them to include the costs of decommissioning to be stuck into a fund and subtracted from subsidy at source.

[Dr Whitehead]

The hon. Gentleman has mentioned schemes that are in the pipeline and related that to the “Enough is enough” comment made by the right hon. Member for South Holland and The Deepings. He has also mentioned local people having their say. Does he agree that a scheme on which local people had had their say and was therefore given planning consent was, first, “agreed by local people”, which is the first test of the Conservative manifesto, and secondly, “in the pipeline”, which is test two of the Conservative manifesto? Does he agree that that is a pretty accurate description of his position?

[Chris Heaton-Harris]

I agree with the first part of that, but I cannot believe that many of these developments are in the pipeline, as the hon. Gentleman says, at this point in time.

I want to discuss how the second part, which we all agree on, could be strengthened, should the Government choose to do so, were their clear manifesto commitment to be derailed, perhaps not here in Committee, but in another place. Members, particularly the SNP Members whom I heard on the Floor of the House only last week, have rightly been concerned about people’s safety, whether it is nuclear sites or energy sites generally. Everyone has been concerned about safety.

There is an element of safety that I believe could be built into the planning system. My hon. Friend the Minister knows that I have been lobbying hard for this to be included in the planning system in respect of onshore wind. This is a crucial difference between onshore and offshore wind: although they are similar technologies, offshore does not raise this concern about excessive amplitude modulation. That is the low thumping noise that people hear if they stand in the appropriate place away from a turbine. It is possible to predict where it will fall and it causes huge concern to local people near onshore wind turbines. Offshore wind does not have the same effect because there are no people living in dwellings nearby, supposedly.

The noise from wind turbines could quite possibly be the next big public health scandal. It has been known about for a very long time. There have been reports since 1995 on the phenomenon of how very low frequency noise generated by turbines, which has been defined to include infrasound, was the cause of annoyance reported by neighbours. The reports included numerous physiological responses that were described as sensations including a feeling of pressure, a sense of uneasiness, booming and thumping pulsations. A huge amount of work has been done in Australia, Japan and now in the United Kingdom on where turbines are situated and how that affects people’s sleep and patterns of stress.

Normally, one would expect this to be taken into account when a planning order is drawn up. In 1987, this was all well known but in the early 1990s, as more and more onshore wind turbines were built, there was a policy decision, I guess one might say, to ensure that concerns about noise limits and planning criteria would not affect where turbines could be situated. A document for noise called ETSU-R-97 was therefore drawn up. It has been massively criticised ever since, but until recently there was no silver bullet to show that it did not work properly because it did not measure the very low frequency background whumping sound that causes people great difficulty.

It could be said, and has been said in debates in this place, that this was a noise condition devised by the wind industry for the wind industry to promote the wind industry and ensure that local concerns about noise were not taken into account. It was certainly referenced in the Kelmarsh decision. Over the last decade or so, the wind industry has fought tooth and nail to defend those standards and guidelines. It has resisted every attempt by anyone to try to change them, but things have changed massively in the past couple of years. The Department itself has recognised that amplitude modulation exists and causes great concern. I FOI-ed every local planning authority in England to find whether they had had issues with noise from wind turbines. A large number had had such issues and had sent environmental health officers to investigate, but there was no central Government guidance on this particular type of noise, which is causing people to become sick. Just recently, the wind industry itself has recognised that amplitude modulation causes the issues I have described.

If we were truly concerned about amplitude modulation and how it might affect individuals up and down this country, we would allow local people—in line with the final part of the paragraph in the Conservative party manifesto that I mentioned—to stick in noise conditions for any planning applications that came forth for onshore turbines. We surely want to avoid a public health crisis in future. We probably recognise that we have not done enough in the past to ensure that people’s health is properly taken into account. There are ways in which the whole Bill can be tightened in this area.

Energy BILL [ Lords ] (Fourth sitting)

Debate between Alan Whitehead and Chris Heaton-Harris

Tuesday 2nd February 2016 Public Bill Committees

[Chris Heaton-Harris (Daventry) (Con)]

Will the hon. Gentleman take the opportunity to make it clear that he still supports local communities having a full say in such proposals?

[Dr Whitehead]

Yes indeed. I hope that the hon. Gentleman, who takes a close interest in these matters, will have taken from my words this morning that I am seeking clarity on how pure the Government’s intention is in that regard. Not only is it the Opposition’s position that local communities should have the final say on onshore wind applications, but I am seeking to ensure that that principle, on which I think he and I agree, is not in any way diluted, diverted or subverted by other legislation that may come along to get round that principle.

[Chris Heaton-Harris]

I am sure we will come later to the commitment in the Conservative party’s manifesto. To save much debate, there is a second part to that commitment:

“As a result we will end any new public subsidy for them and change the law so that local people have the final say on wind farm applications.”

Although I understand that we are going to have a debate about the subsidy bit, I assume that the hon. Gentleman will be in complete agreement with that last bit, about local people having the final say on wind farm applications.

[Dr Whitehead]

Yes, indeed, and on that second part, one could say that the clause, taken by itself and at face value, actually discharges that manifesto commitment. My question is: does it really? Does it really, taking into account the arrangements that might arise across Government to ensure that that manifesto commitment is carried out and not subverted? Does it really, taking into account how the DCLG would handle an application? Does it really, taking into account the announced intention that there will be further amendments to the Planning Act 2008 which may impinge on the Town and Country Planning Act where those applications are concerned? Among other things, in pursuit of this manifesto commitment, what assurances has DECC received from the DCLG that the process will be straightforward, simple and final for those local planning authorities?

My understanding is that under the proposed arrangements, an onshore wind farm applicant would simply apply for planning permission for an onshore wind farm, with all the caveats that apply to planning permission, all the arrangements and considerations that apply at a local level; then local planning officers may recommend to the local planning committee that planning permission be given and councillors on that planning authority may then agree with the planning officers that there are no technical objections and they want the scheme to go ahead. We have to recognise that local councillors may not necessarily always agree with what their officers say and may well reflect other issues marginally outside the exact terms of planning; nevertheless, by that particular arrangement, they may insert into that planning decision the central idea that the community really wants that particular development.

That applies not only to wind farms but to a number of developments where planning applications to some extent represent a two-stage process of looking at the technical issues and the not exactly political but local issues related to those technical issues. If that process is carried out properly and stops there, that discharges the Conservatives’ obligation in terms of their manifesto commitment on future onshore wind applications. If, however, changes are to be made to the obligation itself, either through new powers for the Secretary of State for Communities and Local Government to call in, on an enhanced basis, schemes that otherwise would be subject to only that process, or through constraints placed in secondary legislation on how the process is undertaken, that should cause the Secretary of State for Energy and Climate Change—the key proponent of this particular manifesto commitment being placed into law—to worry a little bit.

The Minister does not look worried, so I am confident that she will be able to put my mind to rest on what other Departments have in store for this Bill. Perhaps she will assure us today that her understanding of what the process will consist of once the clause has been put into law is identical to mine. We can then continue to agree happily across the Committee about the status of this piece of legislation.

The Opposition would like amendment 16 to be made because we believe that for every action, there is the potential for an equal and opposite action that needs to be understood and taken into account in future activity. Later, we will discuss at greater length actions recently undertaken by the Government on various matters relating to the progress of renewable energy. The foreshortening of the period in which the renewables obligation is available for wind farms is just one such action. A number of other actions call into question the Government’s trajectory as far as renewable deployment is concerned.

The question that the amendment attempts to address is: how do those actions relate to the position in 2020? That will be a reckoning point for the European Union renewables target, and a very real reckoning point for the UK because the UK has signed up willingly and enthusiastically to the EU renewables target. The overall target is set within the EU; each country is provided with its own target to reach within that overall goal; and each country sets sub-targets for various sectors of renewable activity—for example, electricity or heat provided from renewables and renewable transport fuels and activity. Together, those three areas make up a country’s target and in theory would discharge the obligation that a country had entered into on the overall EU target.

Energy BILL [ Lords ] (Third sitting)

Debate between Alan Whitehead and Chris Heaton-Harris

Thursday 28th January 2016 Public Bill Committees

[Dr Whitehead]

In this clause, we come to the substantial and often vexed question of decommissioning. Indeed, if we take into account the related schedule, the clause contains provisions about abandonment of offshore installations and the duty to act in accordance with the maximising economic recovery strategy as far as decommissioning and its alternatives are concerned.

I emphasise that the Bill already deals with some considerations, but we contend—we may discuss this later in our proceedings—that the alternatives to decommissioning may need to be looked at rather more carefully to make sure the strategy works as well as it can overall.

[Chris Heaton-Harris (Daventry) (Con)]

I would just like a bit of clarification from the hon. Gentleman. I assume he will be talking about the need for decommissioning and about how to incentivise it and to make sure that the funds are available under the decommissioning fund.

[Dr Whitehead]

Indeed. That is already in the Bill. Clearly, we need to decommission substantial parts of the precommissioned asset in the North sea. The question I hope that we will discuss in some detail is what one needs to do to achieve a proper balance, so that we get decommissioning firmly under way, because an enormous amount of asset clearly needs to be decommissioned. There should certainly be no suggestion that part of the policy is simply to abandon that infrastructure and leave it there to decay.

It is clear that activity needs to be undertaken. As I will mention in a moment, the extent of that activity needs to be understood, because decommissioning could be a substantial new industry in its own right in the North sea—it certainly already appears to be one to many people. Indeed, at conferences, exhibitions and various other things, people are looking at the opportunities the process offers for employment, for supply chain development and for translating decommissioning expertise and practice in the North sea to other parts of the world to create added value. There is, therefore, no doubt that decommissioning is a substantial enterprise that will produce jobs, as well as opportunities in the supply chain and elsewhere, and that is underlined by the scale of decommissioning on the UK continental shelf.

Decommissioning is not just a question of the external infrastructure of the North sea; there is also the important point that we need to plug and cap the wells themselves, as the depletion process continues, and that is—certainly from an environmental point of view—the most important part of the process. We need to make sure that the abandoned, worked-out wells are properly stewarded and plugged and securely taken down and put out of use. At that point, all the other infrastructure that surrounds them can be safely and properly dismantled.

[Chris Heaton-Harris]

I thank the hon. Gentleman for making that point so plainly and putting it in layman’s terms so that even I can understand it. I just wanted to ensure that we had established—and were not going to talk about—the principle of the need to decommission large-scale energy projects and the importance of that to the environment. As that is a given across all political parties, we can get to the meat of the Bill.

[Dr Whitehead]

Indeed, that is a given regarding the situation in the North sea. Of course, that relates to the fact that the North sea is a mature basin. Having a new dawn of massive exploration and the need to develop infrastructure on the back of that massive exploration is only a relatively small part of the future of the North sea. The fact that we have to deal with what has happened so far in the North sea properly, safely and with full confidence is what some people determine is at the heart of the decommissioning industry at the moment.

The scale of decommissioning before us on the UKCS is frankly enormous. Something like 4,000 wells need to be plugged, securely abandoned, and have all the infrastructure taken away. There are something like 290 fixed platforms and 33 floating installations that require particular arrangements to be removed. It is not only that the wells need to be plugged. A substantial number of subsea wellheads and structures that sit on the bottom of the sea to undertake some activities that otherwise would be on the fixed platforms need to be dealt with, and they also need a pretty specialised approach. Above that is the question of the pipelines connecting those wellheads, platforms and installations to the landing points. Something like 20,000 km of pipelines may need to be decommissioned over the next period.

The Committee has discussed the fact that the North sea will have different uses in the longer term, not only carbon capture and storage, and I have already mentioned other uses that may arise. Even if one goes down that particular route—our concern is that proper account is taken of that route when it comes to decommissioning in the North sea—there is still an enormous amount of decommissioning to undertake.

Energy Bill

Debate between Alan Whitehead and Chris Heaton-Harris

Monday 3rd June 2013 Commons Chamber

[Chris Heaton-Harris]

Yes, I accept that we need to be aware of our carbon emissions, and I actually think that being responsible for the environment and trying to deliver the best for it is a Conservative principle. The Bill has some good elements to it, but the centralisation that I mentioned and the increased costs to consumers, businesses and the like are outcomes that we should think more about. I will happily leave my contribution there so that other Members can speak.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I rise to speak to my amendments 48 to 50, which, as we have heard from Minister, are concerned with the development of a capacity market intended to ensure that we have the range of capacity that we will require over the coming years and decades. Not to put too fine a point on it, it is intended to ensure that the lights stay on and that there is a decent margin between what people demand and what we supply.

A capacity market is a choice. It is not the only option available to secure the necessary capacity for the future. It seems to me that that choice needs to be based not just on whether the right capacity margin can be maintained. We should also ask at what cost it can be done, with what reliability and at what risk. I suggest that the choice of mechanism for maintaining capacity that is being made in the Bill fails on all those counts.

I have not invented that conclusion; the Department itself produced an impact assessment on the two choices that it had considered for securing capacity—a strategic reserve arrangement and a capacity market arrangement. Among other things, that choice is about ensuring that the amount of money that can be obtained through the sale of power into the market at times when capacity is tight stays within reasonable bounds. The impact assessment suggested that, in future, those reasonable bounds might get larger and larger. At the moment there is a maximum of about £1,000 per megawatt-hour, but it could go up as high as £10,000, in which case the consumer would be paying an enormous amount for their electricity under certain circumstances. The whole idea of keeping the costs of the capacity market under control would be completely overthrown.

The question then arises: which method best suits the need both to keep the right capacity and to keep it at a reasonable price and with reasonable reliability? Hon. Members will not be surprised that costs of the capacity market option over the period 2010 to 2030 have been assessed at two and a half times those of the strategic reserve option, and the effect on bills at 11 times higher. At first sight, that is not a good sign of the capacity market’s ability to provide a good deal for consumers.

According to the impact assessment, the reason why the Department eventually chose the capacity market idea was the entirely theoretical one that a reliability market

“limits the scope for generators to receive scarcity rents.”

However, the fact is that by introducing a capacity market and auction system in the way that we are, we will effectively provide guaranteed free money for a long period for people who are building conventional generation that provides capacity.

It may come as a surprise to some hon. Members that by introducing an auction market for capacity, we are ensuring that there is a subsidy across all aspects of energy generation, not just some. There is potential for gaming of that arrangement. The Government will have to decide how tight the capacity is after considering what the market will look like four years ahead, and then they will have to create an auction. That choice will be necessary for the auction to take place at all, and it will determine how much money there is in the auction. If the market is gamed so that the capacity looks much tighter than it is, the amount of money will be larger and the price will be even higher.

It is no coincidence—I think that is the best way I can phrase it—that we already see the capacity market tightening. A large number of gas plants are going into either deep or shallow mothballing in advance of 2014, and the Government’s decision about what capacity will look like will be informed by that mothballing. Were I an energy company operative, I would be rather pleased about that, because I would imagine that I would do rather well out of a capacity market in the future.