UK: Infrastructure Bills - With Space For SPP Removal?

Last Updated: 6 June 2012
Article by Angus Walker

Two of the main Parliamentary Bills affecting infrastructure from the Queen's Speech have now been published.  Today's entry considers them in a bit more detail, plus a recent CBI report on infrastructure funding.

Water Bill

First, there is no sign of the third relevant bill mentioned in the speech (see this blog post), the draft Water Bill, but the government have a web page on it and promise it by the summer adjournment of Parliament on 17 July.  It will do a bit of consent consolidation and removal, it seems, in particular swallowing up some consents within the environmental permitting regime.  Incidentally, 'permitting' in this context tends to be pronounced with the stress on the first syllable, despite this not being known to any dictionary.

Energy Bill

The Energy Bill was published in draft last week (it can be found starting on page 57 of this document).  Electricity Market Reform (EMR), the main focus of the Bill, is beyond the scope of this blog, but the main feature of this is 'contracts for difference'.  These are aimed to give confidence to electricity suppliers by providing an apparent fixed price for electricity from various technologies, where the government will agree to pay the difference to a supplier if the market price goes down, or recover it if it goes up, not unlike spread betting (although it is probably unfashionable to compare the two).

There are a couple of other provisions in the bill of more relevance.  An Emissions Performance Standard (EPS) is to be introduced, limiting emissions from electricity generation to 450 grams of CO2 per kilowatt hour.  This would affect unabated coal plants and some of the highest-emitting gas plants (see this graphic) but only applies to newly authorised generation after the provision comes into force.  This won't therefore apply to existing plants, but might affect some live applications under the Planning Act, since the EPS could come in after they have been applied for but before they have been authorised.  Plants with some carbon capture and storage are able to be exempted from the requirement.

Of interest to offshore transmission is one clause (105) that would mean that in certain circumstances it will not be an offence to test offshore electricity generation without a licence for commissioning purposes.  This removes a barrier to the way the Crown Estate's round 3 of offshore windfarms was intended to develop.

Enterprise and Regulatory Reform Bill

The Enterprise and Regulatory Reform Bill was also published last week (not in draft this time).  Despite its name and that it comes from the Department for Business, Innovation and Skills (BIS), it does propose changes to the planning system, in particular merging conservation area consent and planning permission.  It also establishes the Green Investment Bank.

Although it does not mention the Planning Act regime, this Bill would be the perfect vehicle for introducing amendments to reduce the scope of Special Parliamentary Procedure (still bogging down the Rookery South project).  The changes would be in the same category as the conservation area consent changes and would be covered by the phrase 'to make provision for the reduction of legislative burdens' in the long title of the Bill.  The amendments to the Localism Bill drafted by yours truly on behalf of NIPA and tabled last October by Lord Berkeley need merely be adapted to apply to the Enterprise and Regulatory Reform Bill - see amendments 223ZA, 223ZD and 223ZE on this page.

CBI report

On Monday, the CBI published a report on investment in infrastructure with a picture of a carrot on the front. It is entitled 'An offer they shouldn't refuse', although I thought that the godfather was more of a stick than a carrot kinda guy.  There are steps it urges not just the government to take, but also the EU and pension funds. 

One of its main recommendations is for the government to provide 'credit enhancement' (i.e. underwriting a limited proportion of a project cost, say 10%) to all projects to lift their credit ratings to a more attractive level rather than fully funding some projects.  If the project lost money the government would take the first hit.  Getting from BBB to BBB+ would make a big difference, apparently.  The report also calls on banks to invest in projects up to the end of their construction, and then institutional investors to take over during their operation.

Finally it mentions the government project pipeline, saying it should be more investor-friendly.  It no doubt took a lot of work to put together, but has a way to go to provide all the data needed to attract investement.  For example, it currently ranges from the very specific (new dog kennels at Manchester Airport) to the vague (unspecified 'projects' for every police authority).  Health projects are under the ProCure programme (geddit?).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Angus Walker
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