Electricity Market Reform (Contingencies Fund)

Ed Davey Excerpts

Thursday 7th November 2013 Written Statements

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

The Department of Energy and Climate Change requires a cash advance of £4,069,000 from the Contingencies Fund to support urgent preparatory work to fund external advisers in relation to transitional arrangements for early investors and to fund an interim panel of technical experts before parliamentary approval of both the specific enabling legislation and the necessary estimate.

Contracts for difference (CfDs) are designed to ensure sufficient investment comes forward in time to replace old generating plant due to close from 2016 onwards with new low-carbon plant, thus ensuring continued security of supply for the UK and contributing significantly towards achievement of our legally binding EU renewable energy target.

The Energy Bill will, subject to Royal Assent, make provision for transitional arrangements to enable developers to take investment decisions, where required, ahead of full implementation of electricity market reform. The Department needs to engage external advisers before the Bill receives Royal Assent to support the negotiation of any such arrangements to ensure they represent value for money for consumers. Accordingly, parliamentary approval for additional resources of £4,069,000 for this new service will be sought in a supplementary estimate for the Department of Energy and Climate Change. Pending that approval, urgent expenditure estimated at £4,069,000 will be met by repayable cash advances from the Contingencies Fund.