Lobby: Conference calls

It’s party conference season again, but the political landscape has never looked so tumultuous, says Mathew Beech.

Little more than 18 months after the general election, which produced a shock Conservative majority, and with it hopes of a parliament of policy stability, we find the political world in a state of unprecedented turmoil. The cause behind the earthquake: the EU referendum and the vote to leave.

Since then, the Tories have undergone a swift and complete transformation; Labour is undergoing its own painful power struggle; while the SNP, having lost its Scottish Parliament majority, seeks to stamp its authority once again north of the boarder and battle the Brexiteers.

In government, gone is the David ­Cameron-George Osborne power axis at the top. In has come Theresa May to lead the Conservative Party and the country, and she has wasted no time in drawing a clear line between herself and her predecessor. The hiatus while she reappraised the Hinkley Point decision is just one example of her exercising her power.

In the opposition ranks, Labour leader Jeremy Corbyn, who was elected by a groundswell of party member support a year ago, finds himself being challenged following a troubled 12-month reign. A disconnect between the rank and file members and the Parliamentary Labour Party has seen deep divisions develop. Both the incumbent leader and his challenger, Owen Smith, will be seeking to unite the party once the leadership contest is over, and lead a strong opposition challenge as the UK deals with the Brexit fallout.

Once the party has found some semblance of order, it can then get on with the task at hand, including pushing forward policies, such as Corbyn’s idea to “democratise energy” and create hundreds of small suppliers.

In Scotland, the SNP remains the party of government in Holyrood, but its hard fought majority from 2011 has been eroded, with the Tories putting up a strong fight for influence north of the border.

For Nicola Sturgeon, the rumblings of a second independence referendum continue with the latest veiled threat to Westminster coming in the summer. Behind that headline, the SNP is continuing to push for greater powers for the Edinburgh parliament, including over energy policy – with fracking and support for the renewables sector remaining a sore point.

This year’s conference season promises yet again to intrigue. How each party plans to deal with Brexit will dominate the agenda and this will undoubtedly include announcements relating to energy and environmental strategy. Utility Week will be on hand to assess the implications for business.

Areas to address:

Behind the ongoing EU exit negotiations and debate, there are a number of areas the various parties will want, and need, to address at their party conferences. These not only relate to Brexit, but also the ongoing development and operation of the energy and water sectors. Here are some of the key areas Utility Week expects the conferences to address:

Environmental regulations

The majority of the UK’s environmental and water quality regulations are created at a European level. The Drinking Water Directive, Bathing Water Directive and other environmental legislation are monitored, regulated, and punished, by the EU.

The negotiations by David Davis’s Department for Exiting the European Union, over the course of the next few months and years, will have to address what UK standards will be, and where the responsibility for creating them will fall – the Department for Environment, Food and Rural Affairs or the Environment Agency are the likely destinations. In the short term, nothing is likely to change but having that longer term certainty, on which the water and energy companies can invest and maintain their assets, is crucial.

Carbon targets

Once the initial hysteria surrounding the fact the “climate change” part of the name was not being transferred to the new Department for Business, Energy, and Industrial Strategy (BEIS) had died away, thoughts turned to the UK’s role in the EU meeting its climate change targets.

Energy and business secretary Greg Clark has said the UK will ratify the Paris climate agreement drawn up at the end of last year, but there remains some uncertainty as to whether the UK will stick to its climate change plans.

The Climate Change Act ensures the 2050 target remains in law, but further encouraging sounds and policies from all the parties would form a positive discussion, and one to reassure green developers.

EU and single energy market

The final major Brexit policy area the energy companies will be concerned about is the UK’s ongoing relationship with the EU and the single energy market.

The European Commission has been aiming for integration of European member states, allowing electricity to flow across borders to the regions of highest demand. This in turn will help to offset the variability in renewable generation and the mismatch between supply and demand across the EU.

With the UK looking to build more interconnectors, tapping into the greater European electricity market, how Britain interacts with its EU neighbours is vitally important.

Water competition

Away from Brexit, the non-domestic water market is about to enter shadow operation, ahead of the full go-live in April next year. Alongside this, the government has stated that the domestic market is likely to be opened by 2020.

With an Ofwat review stating that a typical household would save only £6 a year, views on how – and whether – the domestic sector should be opened up to competition will surface.

Nuclear

For new nuclear, most people read Hinkley Point C. The much-delayed project is back on the agenda since new prime minister Theresa May approved the deal last week.

Within Labour there are divisions over support for new nuclear, and the SNP is opposed. With a need for significant low carbon baseload generation, the debates will surround whether the new projects are required, and what represents a good deal if they are deemed necessary.

Consumer protection

The Competition and Markets Authority set out its plans to protect energy customers earlier in the year and the government has pledged to implement them in full. But opponents argue that this does not go enough to protect consumers, many of whom are still on the most expensive standard variable or prepayment tariffs.

Solutions could involve greater state intervention, stricter regulation, or a reliance on market forces to come up with the best result. The options are bound to be discussed by MPs and delegates.

Scots fight their corner

Aside from the Brexit talk, and the fact that “Scotland didn’t vote for Brexit” as Scottish first minister Nicola Sturgeon is eager to remind her Westminster counterparts, there is still a large energy agenda for the SNP.

Top of this is the demand for greater autonomy to be given to Holyrood, as outlined under the Smith Commission report.

Whereas the UK government has welcomed fracking, setting out the regulations for it to go ahead – provided any wells meet environmental standards – the SNP is vehemently opposed to developing shale gas wells.

The party is pro-renewables and is demanding more clarity on the future of renewables in Scotland, labelling the policies – or lack of them – coming from Westminster a shambles. SNP MPs and MSPs are eager for the continuation of offshore wind development, as well as for onshore wind, and other new technologies such as tidal.

On the Brexit front, the SNP wants the UK – or at least Scotland – to remain part of the single market, including being beneficiaries of the single energy market.

The Scottish government minister for UK negotiations on Scotland’s place in Europe, Michael Russell, says he intends to ensure Scotland and the other home nations are “fully involved” in the discussions in order to “secure an ever improving society that respects human rights, protects basic freedoms, provides lots of opportunity, and is ambitious for the planet and the place in which we live”.

Winter resilience

Heavy autumnal showers and the first storms of the winter – Angus and Barbara will be the first two – are starting to hit the UK. As they do thoughts will once again turn to the resilience of utilities and the services they provide.

Flood resilience is sure to be on the agenda at party conferences, especially on the back of the flash floods and heavy storms we’ve recently seen around London and Manchester.

This is even more pertinent because earlier this month the Department for Environment, Food and Rural Affairs (Defra) published its flood resilience review, which set outlined its new approach to flood preparation and resilience.

In the report, the government said the water and telecoms sectors had plans in place for temporary improvements to resilience for the coming winter, like those already available in the electricity supply industry. However, it committed to top up these investments with £12.5 million of spending on additional temporary defences, such as barriers and high volume pumps, at seven locations across the country.

Debate will centre on the extent to which flood resilience is a utility business responsibility, for which they should be accountable, and the extent to which government should take direct action to ensure customers and the economy are not discomforted or endangered by increasingly frequent extreme weather events.

Politicians and the sector will both be keen to avoid a repeat of the events – and the negative headlines – that followed the storms of 2013-2014 and led to the creation of the 105 emergency number for power cuts.

Fuel poverty and customer resilience to cold weather will also be a hot topic, with plans for a new energy efficiency scheme and recommendations of a new report from the Committee on Fuel Poverty sure the prompt debate.

Theresa May is eager for her government to be seen taking action to help those in need, while both Labour leadership candidates promise action to reduce energy usage and cut bills for the vulnerable.

Read the pre-conference Political Agenda here.

Click here to read energy consultant Mike Harrison’s column ahead of the party conferences.