Energy Sector Update – Q4 2019

Energy Sector Update – Q4 2019

 

As part of our sector-focused series, we have curated the key resources and points you need to know from the last quarter’s legal updates. Understand the key news stories, practice notes, trackers and upcoming webinars specific to key areas from the Energy sector.

 

Key news stories

 

The Energy sector is divided into several thematic subtopics on LexisPSL. Therefore, we have selected the key news stories from each area for you below. Click to view further information.

 

1.  Electricity and gas market regulation and licensing

 

Great Britain Capacity Market scheme—’compatible with EU State aid rules’

Energy Analysis: The EU Commission has, following a thorough investigation, re-confirmed its July 2014 decision that the Great Britain (GB) capacity market is compatible with EU rules on State aid. Pending publication of the EU Commission’s full decision, we consider what this means for the GB capacity market going forwards.

See: News 30/10/2019

 

Ofgem consultation aims to update smart metering costs under default tariff cap

Ofgem has launched a consultation that seeks views from suppliers and consumer groups on proposals to update the non-pass-through smart metering net cost change (SMNCC) allowance under the default tariff cap, which represents the average change in net costs of the installation of smart meters to suppliers since 2017. Ofgem’s proposed changes to the non-pass-through SMNCC allowance concern gas and electricity tariffs up to the end of 2023. The consultation closes on 19 November 2019.

See: News 23/10/2019

 

2.  Renewable energy

 

Offshore Wind Leasing Round 4—impacts on the energy sector

Energy analysis: The Crown Estate has released the UK’s first major offshore wind leasing round in a decade. Kurt Wicklund, associate and Ian Holyoak, partner, both at Michelmores LLP, point out that the capacity released is only a quarter of the previous round as the Crown Estate seeks to balance the strong market appetite for new seabed rights with the interests of other seabed users and the potential environmental impact.

See: News 10/10/2019

 

RenewableUK calls for political parties to get behind manifesto

RenewableUK has published its manifesto for the 2019 general election calling on all parties to support their measures and build a clear strategy to ensure that the UK reaches its legally binding net zero emissions target. The manifesto sets out a new strategy for onshore wind, an increased ambition for offshore wind, the growth of innovative renewable technologies and regulation for meeting the net zero target.

See: LNB News 13/11/2019 36

 

3.  Oil and gas

 

Government ends support for fracking owing to unpredictability of seismic activity

 

The government has announced that it no longer supports fracking in England following the publication of scientific evidence by the Oil and Gas Authority (OGA) which found that it was not possible with current technology to accurately predict the probability or magnitude of earthquakes in relation to fracking activity. The government has also published its responses to three consultations regarding the shale gas planning process stating that, in light of the scientific evidence and the cessation of shale gas activity announced in a written statement, the government will not be proceeding with the proposals at this time.

See: News: 04/11/2019

 

 

Oil and Gas Authority proposes new fees to better reflect costs of services

The Oil and Gas Authority (OGA) has opened a consultation on proposals for a new and amended fee regime. The OGA is reviewing the rates of existing fees and whether the reasoning for fees and the method of calculating fees follow the principles and guidance of HM Treasury’s ‘Managing Public Money’ policy. The proposed fee amendments aim to better reflect the costs of services—the OGA is not permitted to profit from fees. The consultation will close on 22 November 2019 and a summary of responses will be published in early 2020.

News: 28/10/2019

 

4.  Nuclear Energy

 

Government confirms advanced nuclear programme grant awards

The government has published further information on the previously announced nuclear innovation programme and industrial strategy challenge fund for advanced nuclear initiatives. The government details £18m in funding for the low-cost nuclear challenge as part of a joint £36m investment with the private sector, up to £16m for research and development in advanced manufacturing and materials, and an agreement between BEIS and the National Nuclear Laboratory for the latter to administer the advanced nuclear fuel cycle theme of the nuclear innovation programme for the next two years.

See: LNB News 06/11/2019 24.

 

5. Energy disputes

R (on the application of British Gas Trading Ltd) v Gas and Electricity Markets Authority

Natural justice – Duty to act fairly. In order to meet the requirement of fairness, the defendant (GEMA) should have communicated its assumption (or the underlying reason for making it) when having consulted or at any other stage before it had made the decision, setting the price cap on certain tariffs for the retail supply of domestic energy. The Administrative Court, in allowing British Gas's application for judicial review, further held that GEMA's thinking had been insufficiently transparent, such that the consultation process had been unfair.

See: News 18/11/2019

 

Ofgems request for a new EPC to support the claimants accreditation application was not ultra vires (R (on the application of Farmiloe) v Secretary of State for Business, Energy and Industrial Strategy and another)

Electricity—Renewable energy.Ofgem’s decision, requesting the claimant to provide a new energy performance certificate (EPC) in support of his application for accreditation under the domestic renewable heat incentive scheme (the scheme) in order to obtain a subsidy was not ultra vires and the claimant had not had a legitimate expectation that his application would be determined on the basis of the EPC which he had submitted. The Administrative Court, in dismissing the claimant's application for judicial review, further held that the delay had not been unreasonable and the circumstances distinguished his case from others.

See: R (on the application of Farmiloe) v Secretary of State for Business, Energy and Industrial Strategy [2019] All ER (D) 52 (Nov).

 

 

 

Brexit focus - Commercial and practical help

 

To help you cut through the noise, here are a couple of resources giving you the need-to-know information:

 

1.  Brexit toolkits & trackers

Our Brexit toolkit draws together Brexit content for the practice areas that are relevant for you.

Brexit toolkit: Energy

Brexit legislation tracker

Brexit Contract Management Toolkit

 

2.  Continental Shift: No-deal Brexit and the law

We have published a report on the repercussions of a no-deal Brexit, drawing from interviews with legal professionals:

Continental Shift: No-deal Brexit and the law

 

Keeping up to date

 

Trackers & Precedents

Trackers are practice notes intended to be used to track the progress of legislative proposals, relevant cases, current consultations and key news and guidance relevant to the Energy sector.

 

Click to view individual trackers in the following topic areas:

Energy consultations tracker 2019

Energy legislation tracker 2019

Great Britain energy market—policy and policy implementation tracker

Capacity Market (CM) tracker

Contracts for Difference (CfD) tracker

 

Webinars

 

Sign-up to upcoming and view on demand:

 

Using technology to demonstrate your value in the business (2020)

March 2020

Dealing with conflicts of interest within your organisation (2020)

May 2020

Confidentiality for in-house counsel (2020)

June 2020

 

More In-House Counsel webinars can be found here:

In-House Counsel webinars

 

Get connected…

 

LexTalk®Energy: a Lexis®PSL community

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LexTalk® is a new online community forum which gives Lexis®PSL subscribers the opportunity to post questions, hold conversations, participate in discussions and share best practice. It has been designed to provide a secure place for legal professionals to discuss legal developments, offer and receive peer support, and gain a sense of up to date market practice and advances in real-time. You can access and post questions on all of the dedicated practice area forums, including a dedicated community for Lexis®PSL Energy.

Click here to sign up and meet like-minded community members, create a profile, connect, share, and start participating today! Alternatively, you can access LexTalk® on the key resources tab on your Practice Area home page.

 

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About the author:

Amy is an established writer and researcher, having contributed to publications, such as The Law Society, LPM, City A.M. and Financial IT. Her role at LexisNexis UK involved leading content and thought leadership, as well as writing research reports, including "The Bellwether Report 2020, Covid-19: The next chapter" and "Are medium-sized firms the change-makers in legal?"