Twenty Fifth Report Contents

Instruments of interest

Draft Electricity Supplier Payments (Amendment) Regulations 2017

22.The Department for Business, Energy and Industrial Strategy (BEIS) has laid these Regulations with an Explanatory Memorandum (EM) and Impact Assessment. BEIS explains that an earlier instrument—the “ESO Regulations”10—established a mechanism, the “supplier obligation”, to allow the Contracts for Difference (CfD) Counterparty11 to raise funds from all licensed electricity suppliers in Great Britain to pay for the liabilities that it has to make payments to electricity generators under CfDs and to return money to suppliers where appropriate. The ESO Regulations also imposed an obligation on electricity suppliers to pay a levy that funds the operational costs of the CfD Counterparty. These Regulations make a number of amendments to the ESO Regulations which are mostly of a technical nature, but they include setting a new rate for the operational costs levy for the CfD Counterparty.

23.BEIS says that the 2017–18 operational costs levy for the CfD Counterparty were subject to a four-week consultation which closed on 25 November 2016: a four-week period was considered appropriate due to the limited nature of the material to be reviewed. While some 500 stakeholders were alerted to the consultation launch, in total, two responses were received. BEIS says that one respondent noted the increase in professional and legal fees and emphasised the importance of a strong approach to contracting and outsourcing processes to ensure value for money, when procuring highly skilled external resources. The Department comments in the EM that the increase in professional and legal fees is necessary to support the CfD Counterparty’s management of the Hinkley Point C nuclear CfD and renewables CfD activities; the CfD Counterparty’s approach to procuring external technical and professional advice, instead of having more in-house resources, allows it to access the required support only when it is needed. The total operational costs budget for the CfD Counterparty in 2017–18 will be £14.788 million. We obtained additional information from BEIS, published at Appendix 2. This shows that, in 2017–18, budgeted costs for (external) professional and legal fees will be set at £3.623 million, an increase of £0.591 million (some 20%) on the corresponding figure of £3.032 million in 2016–17.

Social Housing Rents (Exceptions and Miscellaneous Provisions) (Amendment) Regulations 2017 (SI 2017/91)

24.The Department for Communities and Local Government (DCLG) has laid these Regulations with an Explanatory Memorandum (EM), in order to amend the Social Housing Rents (Exceptions and Miscellaneous Provisions) Regulations 2016 (SI 2016/390: “the 2016 Regulations”) which, amongst other things, created certain exceptions from the social rent requirements imposed by the Welfare Reform and Work Act 2016 and made provision for the maximum rent that may be charged for certain of the excepted categories. We brought the 2016 Regulations to the special attention of the House, on the ground of public policy interest, in our 31st Report of the 2015–16 Session,12 and published additional information from DCLG about a review of supported housing, for which initial findings were expected to be available in spring 2016.

25.In considering the latest Regulations, we received additional information from DCLG about the review, as well as about the support expressed by domestic abuse refuge representative bodies for flexibility to set initial rents at a higher level. We are publishing the information at Appendix 3.

10 The Contracts for Difference (Electricity Supplier Obligations) Regulations (SI 2014/2014).

11 The CfD Counterparty is a private company limited by shares and wholly owned by the Secretary of State. Its main roles are to act as counterparty to Contracts for Difference (CfDs) and to manage the collection of monies under the supplier obligation to pay for CfDs.

12 31st Report, Session 2015–16 (HL Paper 126).

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