Interview: Angus MacNeil, chair, ECCC

In between chairing the Energy and Climate Change select committee (ECCC) hearing on future network technologies and appearing in the Liaison Committee’s grilling of prime minister David Cameron, Angus MacNeil found time to squeeze in Utility Week.

Relaxing on the sofa in his parliamentary office, the ECCC chair and Scottish National Party (SNP) MP for the constituency of Na h-Eileanan an Iar doesn’t strike you as somebody who is constantly busy.

However, as he begins talking, the jammed nature of his diary becomes apparent – and it’s made all the more congested following recent government announcements.

The scrapping of the £1 billion carbon capture and storage (CCS) competition fund, the looming – but again delayed – outcome of the Competition and Markets Authority (CMA) probe into the energy sector, the workings of the capacity market, the constant chipping away at investor confidence, and the small matter of tackling climate change are all on his agenda.

Being so busy though, is part of the prize for being a member of the SNP, which enjoyed a stunning general election campaign. It claimed all but three of the 59 constituencies in Scotland, and was awarded the chairmanship of the ECCC as well as the Scottish Affairs Committee.

Being selected to take that chairmanship has presented MacNeil with a challenge, by his own admission, but it’s one he is relishing. The bulging agenda of investigations to be led by the committee this year, is evidence of this, showing MacNeil’s will to be assertive in holding government to account – being a “mirror to the Department of Energy and Climate Change (Decc)”.

It also indicates that MacNeil will be no soft touch following the hardball approach of his predecessor Tim Yeo, who was not renowned for showing quarter to poor decision making in government or industry.

From among the list of investigation topics, it’s CCS which is front of mind as MacNeil meets Utility Week.

He’s preparing to quiz the PM on why the government scrapped the £1 billion competition for the technology at the end of November – something that was “a bolt out of the blue” and all the more shocking because only one month prior the government had told MacNeil and his committee it was continuing to promote investor certainty, and cited the CCS competition as an example.

“You have to ask yourself if one hand of government knew what the other was doing? And did one part of Decc know what the other was doing? The PM previously said it was absolutely critical and then it was scrapped.” The decision is evidence that Decc is being “held almost as a hostage of the Treasury”, he adds. In the government’s drive to turn the £75 billion annual deficit into a budget surplus, it is being “penny wise but pound foolish”.

MacNeil goes on to paint a damning picture of Decc.

“It’s like a farmer deciding it is too much money in the springtime to spend on seeds, and then lamenting when he has no crops in the autumn.”

It’s clear he holds no truck with austerity. The SNP’s ideology supports spending now to grow the economy – and in this case the CCS industry – tomorrow. MacNeil says putting money into the technology would provide a “seed corn”, which would ultimately lead to exports and help to right the UK’s balance of payments.

He continues his scathing criticism of the government, saying that cuts to CCS funding, driven by Treasury ideology, could have broader repercussions.

“It’s an erratic government and they have done this because they want to balance the books today. The knock-on effect is that investors are becoming nervous, which makes any borrowed money more expensive.

“This is a huge mistake,” he sums up, and one which is of a piece with the overall impression that “there is not a plan” behind government’s action on energy and climate change.

A possible exception is the capacity mechanism. But even here, where MacNeil says it was clear what the government was seeking to achieve, the mechanism itself has led to “perverse effects” that are far removed from the intended outcomes.

“They set up a mechanism in the middle which mangles it all and spins out, not in the direction you want to go, but with all sorts of funny things with diesels appearing all over the place.”

Without breaking his stride, MacNeil moves onto the subsidy and support regimes for renewable technologies to shift the UK’s electricity-generating carbon intensity down from its current level of 450g CO2/kWh to the 100g required to meet the 2030 climate change targets.

Solar and onshore wind have borne the brunt of many of the government’s subsidy cuts, but MacNeil – while suggesting this is an area for the National Audit Office (NAO) to investigate – believes that, even with the subsidies in place, renewable technologies could bring down electricity costs.

This puts him at loggerheads with the government, which stated that pulling the subsidies for these technologies was done with consumers in mind and to remove the cost of the levies from their bills.

The ECCC chair says once the renewables have been installed, the cost of generation is “almost nothing” and the generation companies are “dumping it – and they are dumping it – on the wholesale market, which is further lowering the price”.

He surmises that without the levies and therefore the renewable generation in place, “there is an argument consumers would be paying more because the wholesale price wouldn’t be so low”.

“What is not clear is would the price be greater, less or the same, and that is a job for the NAO to determine,” he adds.

Pausing to answer his office phone, which interrupts as a reminder of how in demand the SNP MP is, MacNeil relays to Utility Week a solution that was suggested to him by Philipp Grunewald, research fellow at Oxford University’s Environmental Change Institute, of the need for a “system thinker”.

“I think that is a very good idea,” he says. “I just hope the ideology of the market knowing everything won’t be something that blocks it, because the market clearly doesn’t know everything.”

MacNeil says having an overarching system thinker – or a system architect – would help to avoid the shorttermism he sees as having recently blighted government policy, reassure and encourage investors, and help to develop a more coherent energy system that is able to integrate new technologies effectively.

“There is not a free market in energy; it is a series of stimuli issued from government designed to push and pull various levers, so a system thinker is needed to understand what’s going on, how various bits interact, and the effect one domino falling has on surrounding dominoes – or even ones far away.”

He cites storage as an example. Currently, energy storage solutions are hit with a double whammy of costs – once for taking electricity from the grid and then again for exporting back into the system.

This, MacNeil highlights, is something of a “historical accident” and one that could be resolved with a system thinker in place.

“We have to make sure technology isn’t hobbled by government and regulators who can’t keep up with what technology can do,” he says.

On the technology front, MacNeil touches on the impending smart meter rollout and states prepayment customers should not have to pay a premium after the rollout. He then jumps onto the wider topic of customer interaction and engagement with the energy market and the small matter of the CMA inquiry.

MacNeil is hopeful that the CMA’s remedies – the publication of which was pushed back days after Utility Week sat down with the ECCC chair – will lead to changes in the sector and in attitudes to switching. The most important element, he says, is ensuring that consumers are aware of when a tariff is not value for money and to stimulate them to find a better deal.

“They need to do something serious about switching that is helpful to people – whether it’s compulsory switching or making sure people go onto a tariff that’s not a rip-off.”

He suggests that renaming standard variable tariffs to identify them as the most expensive options would be an easy place to start.

“It’s giving a title so people know that this means. It’s standard nothing. It’s expensive, always. Something as light as that, merely a title change, may stimulate people to think they’re paying too much.”

MacNeil is not one of the millions who needs encouraging to switch. He recently moved away from a big six supplier and even helped an elderly neighbour make the move. These actions are born of a naturally questioning nature, rather than a desire to make a statement on taking up the ECCC role, he says.

Realising suddenly how long it has been since that appointment took place, MacNeil exclaims: “God, doesn’t time fly!” before thanking his predecessor Yeo for discussing “bits and pieces” on the job and the sector.

He also acknowledges the “fantastically knowledgeable” Lord Deben for doing the same.

MacNeil is still learning in the role and adjusting to the changes it has brought to his political life – including an unusually lively Christmas party season. “It’s been transformative,” he says. “Previously there were very few people who would want to talk, but this time there are a lot of people who now want to talk.”

Those conversations are leading to ever-increasing opportunities to “firefight” for wide-ranging causes, from farmers with wind turbines in Derbyshire to “someone trying to get a connection in Somerset, or for customers in rural Wales”.

“I’ve probably never been busier,” MacNeil rounds off. And with that, his office phone rings once again, summoning him to his next meeting.

Angus MacNeil is speaking at the Utility Week Energy Summit in London on 5 July.

For more details, visit: www.uw-energysummit.net