Energy and Climate Change Committee - Draft Energy Bill: Pre-legislitive ScrutinyWritten evidence submitted by Somerset County Council, Sedgemoor District Council and West Somerset Council
1. Summary
1.1 Somerset County Council, Sedgemoor District Council and West Somerset Council are calling for Community Benefit to cover the operational phase of new nuclear power stations via the local retention of business rates. The key points are that legislation should;
(a)
decarbonise the energy sector;
make energy supplies more secure;
help protect customers from fossil fuel price fluctuations;
drive investment in new jobs and business;
keep the UK on track to achieve carbon reduction objectives; and
accept that the best way to win public acceptance of new nuclear is to reward and compensate the local communities hosting the necessary infrastructure.
(b)
This concept is already well-recognised by Government for specific projects in the UK in relation to renewable energy, oil and gas, and nuclear waste storage. It also supports localism.
By their nature, new nuclear developments will be substantial, and, while bringing some UK wide and regional benefits, they will also result in impacts on local communities of a scale that is much greater than most renewable energy projects.
Not to include nuclear power within the definition of eligible energy technologies is inconsistent and unfair for communities which host new nuclear developments.
The planning system alone cannot address the entire scale, scope and impact on local communities as a result of hosting new nuclear developments.
The Government has already accepted the principle of Community Benefit in the National Infrastructure Plan 2011.
2. Introduction
2.1 Somerset County Council, Sedgemoor District Council and West Somerset Council (“the Councils”) welcome this opportunity to provide written evidence to the Committee on the draft Energy Bill.
2.2 Somerset is situated in the South West of England and is likely to play host to the UK’s first new nuclear development—Hinkley Point C.
2.3 The Councils are responsible for the administrative areas affected by proposals currently being developed by EDF Energy for Hinkley Point C, on a site immediately to the west of the existing Hinkley Point nuclear power stations in Somerset.
3. Key Points
3.1 The Councils’ welcome the Energy Bill as it is clear that steps need to be taken to ensure that the right mechanisms are in place to attract the level of investment that is necessary to ensure that secure, low carbon sources of electricity are developed at the required pace. The Energy Bill must ensure that the stable conditions are created so that the right incentives are in place which will provide the appropriate level of certainty enabling all those involved to play their respective roles including regulators, investors and industry.
3.2 The Councils’ would urge the Committee not to overlook the key role local communities’ play in the delivery of new facilities that will generate the low carbon energy that the UK requires. The Councils believe that it is vital that host communities of new nuclear developments see direct benefits from hosting these vital projects in the short and long-term.
3.3 The National Infrastructure Plan 2011 issued by HM Treasury states at paragraph 3.81: “…. Engage with developers and local authorities on community benefit and bring forward proposals by 2012 for reform of the community benefit regime to provide greater certainty for all parties.” It is the firm belief of the Councils that the means by which this could be achieved is, in part, through an appropriate legislative framework that enables host communities to retain a proportion of the financial benefits that would be generated from a new operating nuclear power station.
3.4 The Councils recognise the importance of the Energy Bill to all those concerned with new, low carbon energy development in the UK. Whilst it is appreciated that the matter of a legislative framework associated with Community Benefit may not be a direct matter for the Energy Bill itself, we are keen to ensure that the Committee is aware of this issue and are able to consider this matter when making recommendations which could then be taking forward in relevant legislation. As the Bill intends to provide certainty to ensure that the required long term investments can be made we believe that the same principle should be made available to local communities that will host these developments. Any retention of Community Benefit should be independent of Government review, providing certainty to local communities so that they are able to make long term plans of how best to use community benefits to support local economic growth and enable the creation of a UK supply chain to support the development of new energy generation facilities.
3.5 We would like to draw attention to comments made by EDF Energy in their evidence submitted to the Building New Nuclear: The Challenges Ahead discussion, that: “it is absolutely critical that the Government continues to make steady, tangible progress with its Electricity Market Reform (EMR) plans and the framework for enabling investment decisions for early projects.” Speaking to the Nuclear Development Forum on May 15 2012, EDF Energy CEO, Vincent de Rivaz stated: “It is also important that host communities appreciate and see direct benefits from hosting these vital projects. I hope we will see this principle enshrined in regulations.”
3.6 The Councils remain supportive of the development of new nuclear energy infrastructure and the investment in the area, as well as the potential jobs and additional training and skills that are to be provided by the developers. However, this support is conditional upon the development not being to the detriment of our local communities, businesses and the environment.
3.7 Whilst the planning system ensures that direct impacts of nationally significant infrastructure are mitigated, it will not go far enough in the case of new nuclear development. We believe a Community Benefit Contribution scheme could be used to reflect the longevity of a new nuclear build development, including construction, operation and waste storage/decommissioning phases.
3.8 We see Community Benefit as designed to recompense communities outside of the Section 106 Agreement, ie outside the direct negative impacts that are quantifiable and evidenced before development starts. This is because the Section 106 regime is limited in its remit and solely related to planning impact.
3.9 The purpose of Community Benefit is to reward and compensate communities for significant infrastructure projects that they host. This is recognised both in the business rate retention proposals for renewables as well as the Community Benefit protocol already agreed for that sector. The Renewables sector already has a commitment for business rate retention which is wider than just wind farms. Whilst wind farms intrinsically may be of a low rateable value and therefore potentially less significant in funding terms, other renewable provision envisaged by business rate retention like biomass generators, will be more significant in scale.
3.10 This would have a significant financial impact in regard to business rate retention and lead to inequality of treatment. Why should a community that hosts a biomass generator benefit from the potentially significant sums generated by 100% retention of the business rate, whilst the new nuclear power station host communities receive no such reward and compensate?
3.11 All the criteria used in the Government’s Consultation on Business Rate Retention—including “creating a diverse energy mix; decarbonising our economy; creating energy security; protecting consumers from fossil fuel price fluctuations; driving investment and jobs; meeting carbon emissions reductions commitments; and incentivise development for growth”—are equally applicable to new nuclear development.
3.12 Community Benefit funds can be used to stimulate and sustain wider economic growth and indeed tackle barriers to growth, which cannot be met by existing Central Government or private sector finances. An example might be critical infrastructure required to enable UK businesses to participate more fully in the energy supply chain.
3.13 In summary, in order to enable sustainable economic growth there is a need to invest early in the construction programme so that the negative economic effect can be counter balanced. In addition, there are likely to be impacts that could not be captured by the planning regime given the scope and scale of the development.
3.14 Somerset’s residents and business, or any other community expected to host new nuclear development, are likely to be significantly affected by the proposed new nuclear development, should new nuclear development be approved. While the Councils welcome the potential for UK wide economic growth and associated benefits a development like this may bring to an area, we are equally aware of the potential negative impacts and burden it could have on host communities.
3.15 Therefore, we see Community Benefit as the means by which local communities can be fairly and reasonably recognised for hosting an infrastructure proposal which will have a transformational effect upon a local community. Given the scale of the development proposed, particularly during construction, the planning system will not address all of the potential long term and far reaching effects (both positive and negative).
3.16 The following matters could not be achieved through a series of planning obligations;
Creating sustainable economic growth to support the delivery of new nuclear in Somerset and the UK. Also ensuring that the locality continues to attract other investors.
Scale and duration of disturbance.
Residents’ perceived impacts.
Impacts on those that will not receive any direct benefits such as employment opportunities.
Long-term well being of an area.
4. Recommendations
4.1 The Councils respectfully request that the Committee consider recommending that the concept of Community Benefit be considered through a suitable legislative process. The matters which we wish the Committee to consider including in their recommendations are;
That a clear framework is created which enshrines the concept of Community Benefit in appropriate legislation.
That any legislative framework addresses the inherent inconsistency between renewables and other low carbon energy generation technologies.
That Community Benefit in relation to the UK’s New Nuclear Builds recognises the role communities play in hosting such developments morally, politically and practically.
That as Community Benefit is a common and well established practice in the UK in relation to the renewables, oil and gas sectors and is under consideration in respect of waste, it is equitable and consistent that Community Benefit schemes should apply in relation to the UK’s New Nuclear Builds.
The size of a Community Benefit scheme associated with New Nuclear Builds should reflect the overall scale, nature and national significance of the development and the particular local circumstances of the host communities.
A Community Benefit scheme should provide short and long-term benefits to host communities. Any scheme should reflect the longevity of a New Nuclear Build development and assurances should be provided regarding any timescales for any review of associated legislation.
June 2012