IAN Marchant, the former boss of Scottish and Southern Energy (SSE), has called on government to settle electricity sector policy for a generation as the country goes to the polls.

 

Mr Marchant, who chairs renewable firm Infinis Energy, delivered a stinging critique of current UK energy policy in a keynote speech to the All-Energy conference in Glasgow yesterday.

Asked later to name one issue for the new UK Government to tackle when it takes office after today's election, he highlighted the "fundamental question of regulation of competition - and that applies to both generation and retail."

Mr Marchant said: "Let's resolve this for a generation. Are we going to go down the regulated route and make it work properly - and there are a whole things you would do - or are you going to go to markets and make them work properly, and then there's a lot of tearing up to be done.

"That political philosophy point I think is the fundamental issue."

Mr Marchant told conference delegates that he had dealt with 11 energy ministers in his 11-year tenure as chief executive of SSE, which ended in 2013. Speaking later, he urged the next incumbents at Downing Street to appoint a new energy minister as quickly as possible, declaring that the current political impasse had left the industry in a state of "stasis".

Mr Marchant said: "The election is the most uncertain I have known in my life, therefore who will be the next ministerial team at the department of energy is even more uncertain because you have got to pick who will be the government, and who will get that ministerial slot.

"[If] you've got a coalition, is it the junior partner [or] senior partner? How do all the other jobs sit?

"The industry is effectively in a position of stasis at the moment. It can't really function because of that degree of uncertainty, and that applies across the whole piece.

"I just hope for a quick resolution to the overall political situation, and a sense of clarity and long-term thinking from the team at DECC. Whatever colour they are, [I would like to see] clarity and long-term thinking."

Mr Marchant's call for clarity was echoed by Keith Anderson, chief corporate officer at ScottishPower, who chaired the morning plenary session at the Scottish Exhibition and Conference Centre yesterday.

With the polls pointing to a hung parliament after today's election, Mr Anderson emphasised the need for a new government to be established as quickly as possible.

However, while Mr Marchant used his conference speech to address the shortcomings of UK energy policy, he urged the next regime to give recent reforms the chance to bed in.

Highlighting the long-term nature of investments which companies such as ScottishPower are making in energy infrastructure, on track to total £1.3bn in the UK this year and the same in 2016, Mr Anderson said it was vital for the industry to have a "clear line of sight on Government policy".

He said: "We've been through a huge process to create EMR (Electricity Market Reform). It's started, it's kicked off. We've seen the running of the first capacity mechanism and the running of the first contract for difference auction. Let's look at whether we can make some small tweaks and changes to them to make them a bit more effective and efficient.

"But the big call from everyone in the industry for a new government coming in is "do not fundamentally change what we have now created". That's the worst thing for the industry. Some of the mechanisms might not be perfect. We can change, we can reshape, we can adapt, but don't come in and do wholesale change."

"It's exactly the same message with the Competition and Market Authority. The decision was made to refer the industry to the CMA. The CMA are reviewing and investigating the industry. It is a long process, it is an incredibly robust and detailed process, but you need to let it complete."

He added: "The worst thing for the industry, and the frustration always for the industry, is if these things aren't allowed to bed in, they are not allowed to develop and we don't get to see the benefit of them and the outcome of them because someone comes along and changes the process halfway through."

"That's when people in the industry get frustrated, that's when we as companies get concerned about long-term investment."

In a playful speech, Mr Marchant identified 10 aspects of energy policy he would change in the "nightmare scenario" of himself being appointed the government's next energy minister on Friday.

He said he would demand civil servants tell him the "absolute truth" about the security of UK energy supply for the coming winter, including how much comes from European inter-connectors.

He turned his ire on what he slammed as the "complete fiasco" of the "contracts for difference edifice" - the mechanism for determining the revenue earned by renewable energy generators.

"I would let the next auctions run, but I'd like to do two things," he said.

"I'd start the battle with the Treasury before the chancellor has opened his first red box on the levy control framework, which is frankly a disgrace. It is not democratic, not supervised by parliament and it is intellectually deficient."

Mr Marchant attacked the "complete mess that is the energy supply sector", noting that it had been "kicked into the long grass" by the last minister, who referred to the competitions authority.

"Frankly there are only two ways of solving this tangled mess. Either properly regulate it, or strip away the stupid interventions that go with competition and markets.

"One or the other, and I would say to my civil servants they have two weeks to analyse those two options and recommend which one we should do. The frankly I would flip a coin, because either of them are better than where we are now."

Conference delegates also heard yesterday from Sir Jim McDonald, principal and vice-chancellor of the University of Strathclyde, Benj Sykes, head of asset management at Dong Energy Wind Power, Scottish energy minister Fergus Ewing, and Glasgow City Council leader Gordon Matheson.