Within the amendments tabled by the government on 29th October 2009, the Government has introduced two separate amendments, one for electricity (sections 29-31 on pages 3 to 7) and one for heat and biogas (section 42 on pages 11 to 13). These are modelled broadly to meet the aims for which the REA and its collaborators had campaigned.

They opted for two different measures (rather than the single one we had proposed) because the tariffs will be paid by different groups of energy suppliers. The REA will be pressing for maximum commonality between the two measures to make it as easy as possible for users who wish to take advantage of both. Both tariffs would be administered by Ofgem.

The amendments have been drafted as enabling powers with very little detail of how the mechanisms would actually operate, or what tariff levels would be set. All these details would therefore appear in the secondary legislation.

For those less knowledgeable on parliamentary procedures: the primary legislation (the Energy Bill – to become the Energy Act when passed) gives an ‘enabling power’ for the Secretary of State to bring forward a policy mechanism – in this case the tariffs. The actual details of how it will work, the tariff levels etc are then consulted on and introduced in a so-called Statutory Instrument, the secondary legislation, which is laid before parliament. This is then debated if it is by 'affirmative resolution' (as for the heat and biogas tariff), but not if it is by ‘negative resolution’ (as proposed for most provisions of the electricity tariff).

Neither amendment currently requires the powers to be actually used, nor incorporates a timetable. In practice it is rare for powers to be taken in primary legislation and not used. The lack of timetable is a concern and we support calls for a firm adoption date to be specified. Civil servants have indicated they would expect to consult on the electricity tariff in summer 2009, with a view to introducing it in 2010 (prospectively in April).

Heat is due to be consulted on before the end of 2008 anyway, so might be able to achieve the same implementation date.

The low carbon electricity tariff

This is described as a ‘Feed-in tariff for small scale low carbon electricity’ and is shown in the separate extract attached (and in sections 29-31 on pages 3 to 7 of the overall amendments). It is however not strictly a feed-in tariff as it is intended to apply to generation (whether this is used locally or fed into the grid).

It would be introduced through modifications to the licences of electricity suppliers.

Sub-clause 3 specifies that the secondary legislation would (or could) define:

• The level at which the tariff is calculated
• A formula to decrease the level of the tariff year by year
• Exclusions from the tariff (e.g. to exempt RO-registered installations)
• Provision for recovery of payments to generators (presumably in cases of error or fraud)
• Various provisions for payments between electricity suppliers and Ofgem (presumably to ensure that the ‘burden’ is spread fairly between suppliers)

Sub-clause 5 specifies the eligible technologies, including all recognised renewables but also fossil-fuelled CHP below 50kW and fuel cells. Apart from fossil CHP, the secondary legislation can specify caps for the maximum eligible size of other technologies, and this cannot be above an upper limit of 3MW.

This has been introduced to ensure that this measure does not interfere with the RO, which is intended as the primary mechanism to support large scale (merchant) renewables. As the vast majority of current RO registered capacity is over 3MW, this limit should achieve that objective. Bearing in mind, however that this is a maximum level, below which individual caps could be set, many consortium members support the case for raising it to 10MW. The key issue, though, is not necessarily this upper limit, but the actual caps to be set in the secondary legislation, and we will need to reconsider this carefully during consultation. We believe that as long as the dividing line is clear, neither the RO nor the tariffs need be destabilised by the existence of the other.

Except for some of the licence requirements, secondary legislation in respect of the electricity tariffs can be made by negative resolution (see above).

Heat and biogas tariff

This is described as ‘renewable heat incentives’ but is defined to apply to:

• renewable heat generating plant

• production of biogas (it doesn’t say this is restricted to use for heat)

• production of biofuel for heat generation

These can be more precisely defined in the secondary legislation. The measure is detailed in  the separate extract attached (and in section 42 on pages 11 to 13 of the overall amendments).

Payments for this tariff would be made by ‘designated fossil fuel suppliers’.

Sub-clause 2 specifies that the secondary legislation would (or could) define:

• The level at which the tariff is calculated
• Provision for recovery of payments (presumably in cases of error or fraud)
• Various provisions for payments between fossil fuel suppliers and Ofgem (presumably to ensure that the ‘burden’ is spread fairly between suppliers)

Sub-clause 4 specifies the eligible technologies, including all recognised renewables. CHP is only eligible under this measure if it is powered by renewable fuels. There are no provisions for a cap on eligible size, and indeed the intention is that it should apply to renewable heat at all scales.

The secondary legislation will need affirmative resolution (see above).