Amicus

 

 

Amicus has consistently been campaigning within the energy sector to ensure that the country has security of supply and a balanced energy policy. Last year, Amicus held a conference with all the main stakeholders from the distribution side to look at the possible implications of the recent distribution price review. Prior to this we produced a document for the energy review outlining our energy position and we produced a booklet looking at new connections.

 

Amicus met with energy ministers to highlight our concerns in the run up to publication of the Energy white paper- creating a low carbon economy. We still believe that many areas of that paper are flawed; particularly it’s over dependence on imported gas and oil.

 

More recently, Amicus met with Malcolm Wickes to express concern over the disparity in gas prices in the UK compared with the rest of Europe and sought assurances about future regulation of the interconnector and security of supplies.  Amicus has serious concerns over the market drivers and outcomes and believes that the security of supply (i.e. strategic delivery and storage) should be treated by government as outside of the market. 

 

In addressing future energy supplies, Amicus still remains concerned at the cost of updating the transmission and distribution system in order to ensure that renewables are able to come online.

 

Amicus would like to see more joined up thinking in relation to the DTI and DEFRA .

 

Amicus believes that the best way to ensure security of supply is to have an energy mix using a range of energy sources prioritised in the following order coal, nuclear, renewables and gas and oil.

 

 

Reliance on gas

 

Amicus believes that the Governments Energy white paper position is too dependent on gas and oil for meeting the energy requirements of the nation.

 

The main producers of gas and oil will be in the Middle East and Russia; this potentially makes the UK vulnerable to supply disruptions, which will continue to increase as international trade expands.   The recent events between Russia and the Ukraine demonstrate the potential for disruption to supply from the largest gas producer.

 

Furthermore all the large consuming countries, including China and India, are growing increasingly dependent on imports from an ever-smaller group of distant producer countries, some of them politically unstable.  Wells or pipelines could be closed or tankers blocked by piracy, terrorist attacks or accidents.  As a consequence of this oil markets are likely to become less flexible and prices more volatile, leading to substantial energy price rises in the years ahead.

 

Amicus believes that government must take immediate action to address the short term issues affecting energy prices and security of supply and these should include:

 

• DTI should introduce regulation for activities in the North Sea and take powers to monitor the use of the interconnector to ensure security of supply, rather than having the supply side determine flow.
  
• The information produced by the supply side should be available to customers in the same format and on the same timescales.
  
• If supply problems are largely due to an inadequate interconnector and UK storage capacities, then the security of supply could be assured by booking storage elsewhere and reserving interconnector capacity-use rights until the situation is corrected. Costs could be recovered for a fraction of the price peaks the current arrangements are creating.
  
• Spare interconnector capacity could be taken over by a 3^rd party on a regulated basis (e.g. UK government) to fill Rough storage in the North Sea.
  
• Fair and equal access should be ensured for all companies to the monopoly energy infrastructure across Europe, allowing easier access to pipelines for companies who either wish to compete with the incumbent suppliers or who wish to transport gas to where it is needed most.

 

Future energy supply policy

 

Amicus believes in a balanced energy policy to meet the energy needs of the nation. This includes the use of Nuclear, oil and gas, coal and renewables. We believe that this energy mix will ensure security of supply well into the future.

 

Nuclear

Most UK nuclear power stations are coming to the end of their lifetime and it will take from now between fifteen to twenty years to get new power stations up and running.  The NDA must be a success in terms of decommissioning nuclear power plant to ensure a viable future for the nuclear industry. As such it is crucial that the government ensure that it receives the resources and political support that it needs.

 

Renewables

Amicus recognises that renewables have a place within a balanced energy portfolio, however we believe that the Government’s targets in the energy white paper are too optimistic.  Furthermore the costs associated with updating the transmission and distribution system will be very expensive and this will prove extremely costly to the taxpayer.

 

Coal

 

Amicus is concerned that if Flue Gas Desulphurisation (FGD) is not fitted to coal fired power plants by 2008 then it will be difficult to ensure that peak electricity demand is met. Many companies have decided not to invest in FGD and we would like to see the Government do more to encourage those companies to invest in ensuring they fit FGD.

 

We are concerned that uncertainty around the large combustion plant directive, is putting off companies investing the money into FGD even though they previously agreed to have FGD fitted. We believe, and all the signals suggest that the companies believe there will be another dash for gas i.e. new build of CCGT power stations.

 

Amicus believes that a programme of publicly funded research and development for clean coal technology must be undertaken as part of a long-term energy policy for the UK.