Political intervention through changes to energy policies is seen as the greatest threat to the future of power and utility (P&U) companies, a new poll suggests.

Based on a survey of 110 P&U senior executives from 20 countries, the “fast-paced” change of regulations was highlighted as the highest priority of risk. Price volatility and access to competitively priced long-term fuel supplies are the second biggest risk, according to Ernst & Young’s new report.

Richard Postance, Power & Utilities Advisory Leader said: “Given its potential impact on everything from half-century capital planning to customer operations, political intervention is seen as a significant risk for the P&U industry, even in markets like the UK that have been considered stable and transparent. In a world of rising energy prices we are seeing a real fear amongst utilities of ending up on the wrong end of expedient, but shortsighted political action.

“Since political intervention is expected to continue as energy policy evolves utilities cannot take a back seat in the engagement of their consumers. Without prior education and a trusted relationship consumers will perceive ‘it is government policy’ as an excuse, not a reason.”

The top three business opportunities highlighted for this year and continuing into 2015 were the rising energy demand in emerging markets, acquisitions or alliances to gain new capabilities and growth in energy services markets.

A new website which lets energy end users ‘build an energy policy’ on how they handle power has just been launched.

Energy users can browse policies and save ones they like the look of, similar to using an online ‘shopping basket’.

Created by consultancy Amber Energy, the website sets out jargon busters for the electricity sector and guides on whether a firm needs voltage optimisation or triad alerts, for example.

Nick Proctor, Director and Founder of Amber Energy told ELN: “We developed it because we think the energy sector is overly complicated. Other sites only seemed to complicate it more.

“When you’re an energy manager or a finance director, there are tons of acronyms, DCDAs, CCLs. What we figured people actually need is just a really simple process that’s transparent and allows them to work out the things they need before it gets complicated. You can work out what will add to your business and what will save you money,” he added.

The consultancy man went on: “The site allows you to go through the site and almost at any time add to a sort of ‘shopping cart’ but actually you’re adding to your own policy. As you come across things you decide your business needs, you can click on it and add to your policy.”

He explained: “Once you’ve done that, you can click to collect your energy policy from us and that allows us to send across the detail you need just to start you off, as far as you need to build your policy in-house.”

The chairman of energy supplier ScottishPower and its Spanish owner Iberdrola has called for more guidance from Government to avoid energy shortages in the next few years.

Ignacio Galan was the second Big Six energy suppliers to criticise the lack of clarity in British energy policy in the space of a few days. Scottish supplier SSE’s chief executive warned last week the Government is “significantly understimating” the scale of the challenge over the next three years to keep the lights on.

Addressing shareholders at Iberdrola’s Annual General Meeting in Bilbao on Friday, Mr Galan said: “Although the Energy Bill (Electricity Market Reform) currently going through Parliament is in the right direction, greater clarity of detail is needed if investment in new power stations is to be speeded up.”

He said that once a new framework for UK networks for the years 2015-2023 is approved, Iberdrola’s spending on transmission and distribution could “exceed £7billion”, taking into account both committed and planned investments.

Energy Secretary Ed Davey yesterday denied there was any uncertainty over plans for new nuclear power and admitted the Government has had some “false starts” with a couple of its carbon cutting policies.

The future of nuclear in the UK has appeared to hinge on whether the Government gives suppliers enough financial support in the form of a ‘strike price’, as in a guaranteed price for low carbon energy. It is currently grappling with EDF Energy about what level this will be. Recent reports suggest the Treasury is considering writing a guarantee for nuclear power with taxpayers’ cash. A decision on the strike price is long overdue.

Giving evidence at a Lords hearing of the EU sub-committee on energy and environment, Mr Davey was asked if uncertainty over nuclear was pushing more focus on other sources of energy like shale gas and CCS technology.

He replied: “No, the uncertainty on nuclear isn’t there, certainly not from where I’m sitting. We’re engaged in, I think, a very ambitious nuclear position and I know our friends in the media want to comment on everything and say it’s all going wrong but it’s not.”

He also admitted the UK has seen a “few false starts” with Carbon Capture and Storage (CCS) technology – which is seen as key for the future of using fossil fuels for power.

The Government was criticised for the collapse of a CCS project at Longannet coal station two years ago and has recycled the funds earmarked for it.

Mr Davey told the Lords the UK has “one of the most attractive packages” for CCS, with £1billion available should the Government sign any contracts with applicants for the cash, he suggested the technology has a “global element” which shouldn’t be ignored.

A new independent inquiry to investigate the future of electricity supply in the UK was launched yesterday.

The ‘Future Electricity Series’ is a three-phase nine-month research, which will explore the three “pillars” of electricity supply – fossil fuels, renewables and nuclear – and what role they can play in meeting the Government’s objectives of providing sustainable, secure and affordable power. It aims to identify future policy challenges and help policy makers understand how different technologies can contribute to the nation in the long term.

The inquiry will be chaired by former Energy Minister Charles Hendry and Opposition Energy and Climate Change spokesperson in the House of Lords, Baroness Worthington.

Mr Hendry said: “As a Minister I too often found that energy was an area where many people had absolute solutions…whereas, in reality, we need a mix. If we make the wrong decisions now, we lock ourselves in to decades of mistakes. Therefore a long-term understanding of what is possible and what is achievable is critical to that decision making process. This inquiry is going to go to the heart of these issues.”

Carbon Connect, an independent forum of parliamentarians and industry members, will run the inquiry.

Another winter and another round of price rises. The Office for National Statistics blames most of the inflation for December on energy and food costs; consumer groups blame big energy companies and the Government is happy to chip in.

Same old, same old, you could say – but not this time.

Firstly, this isn’t temporary but is the new norm – the era of cheap energy is indeed over. Second, while in the past price rises have been driven by the cost of commodities, mainly the price of oil (which gas and to a great extent electricity are linked to), the future could be a whole different ball game.

The blame game

When commodity prices drove energy bills, consumers would blame energy companies, energy companies would blame the oil market – and of course the oil market would ‘blame’ the war in Iraq, in Libya, in Syria, the demand for energy in China, Fukushima and so on.

But in future, the price of energy will increasingly be pushed around by ‘other’ or ‘third party’ charges: network charges, renewable subsidy, energy efficiency and social tariffs.

Between winter 2010/11 and winter 2013/14 such charges will have risen already by about £100. Blaming the commodity markets and the big energy companies won’t suffice – the role of smaller players, regulators and government will come to the fore. Basically, the cost of decarbonisation will begin to bite.

At the same time though, prices may end up less volatile as the ‘market driven’ chunk of energy costs becomes smaller. Energy managers might at least be able to use this to forecast their future costs more accurately.

Rise of third party charges

And third party charge-influenced price rises will start sooner than you think. Bills will go up again in 2013 at some point, likely before next winter and probably after a round of small price reductions.

I would expect for the first time people won’t point the finger at wholesale costs but instead begin to refocus the debate on the non-energy components of prices: which leads naturally on to energy policy.

Current policy dates back to the boom years before 2008 when we, as a society, thought we could pay for decarbonisation. Several years later the economic outlook is much less rosy – so are we still happy to pay for a low carbon economy?

Small consolation prize?

The only consolation for energy companies, for DECC, Ofgem and the energy industry is that in the longer term – beyond next winter – worries about rising energy bills will be superseded by worries about rising prices for pretty much anything else. That’s because inflation will inevitably and inexorably pick up once the economy starts to grow again. Though that will be no consolation for consumers.

Filippo Gaddo is an independent economic consultant who previously worked at Ernst & Young and the Department of Trade and Industry before it was replaced by BIS.

Energy Minister John Hayes tried to dispel the idea his department is in a head-to-head with the Treasury by declaring it isn’t the “enemy” in a recent interview.

The Department of Energy and Climate Change (DECC) has appeared to be at odds with the guardian of the coffers over spending on renewable energy and fossil fuels.

This isn’t the case, according to the Tory MP who joined the department in the Prime Minister’s last reshuffle in September.

In an interview published in the latest issue of Parliament’s magazine The House, Mr Hayes (pictured) tried to bridge the departmental divide by suggesting people who see Treasury as the “enemy” are “not going to get very far”.

He said he has a “very good relationship” with the Chancellor, while the MP Sajid Javid who now takes care of energy at the Treasury is his former parliamentary private secretary and Financial Secretary Greg Clark is a “close friend… I’m his son’s godfather”.

Mr Hayes said: “It is very useful that while we all do what we must professionally, that those personal relationships underpin that professional link. It is true that I’m anxious to ensure that, using those personal relationships, we support a really good and positive relationship between DECC and the Treasury. We routinely have to engage the Treasury and get Treasury support and so that really is a natural part of being in Government.”

The minister also said suppliers “recognise there’s got to be work done here” on the issue of transparency and high tariffs, suggesting the Government wanted to avoid “intrusive ways” of forcing suppliers to put people on the cheapest tariff.

The minister also revealed he has a family link with the world of energy: “My father worked in a power station. He was a turbine driver in Woolwich power station for 45 years, interrupted only by his war service when he was sergeant in the 8^th Army in El Alamein, Monte Cassino and Anzio. He was wonderful, he was loving and gentle and wise and clever. I miss him every day.”

Labour leader Ed Miliband yesterday taunted David Cameron with new figures which show the amount of money invested in the UK’s renewable energy sector has dropped since the Coalition came to power.

While the Prime Minister is at EU talks in Brussels threatening to veto more European spending, the Labour leader highlighted his government’s failure to keep green cash in the UK.

While on a visit to the Whitelee wind farm in Scotland, Mr Miliband unveiled analysis by Bloomberg New Energy Finance (BNEF) confirms what many long-suspected:  a peak in green spending during 2009 has since fallen drastically.

Mr Miliband said: “Already billions of pounds in investment is going elsewhere or being put on hold. Thanks to this Government, the investors who want to invest in our green sector are shutting their wallets or going elsewhere. Since this government came to power, investment in renewable energy hasn’t gone up, it hasn’t even stagnated – it has halved.”

Knowing the Energy Bill was due imminently, Mr Miliband put his weight behind calls from big businesses to bring in a 2030 decarbonisation target, saying: “That is what I would do if I was in Downing Street now and that is what this Prime Minister – who once flew halfway across Europe to hug a husky – should do.”

Environmental group WWF said this sort of target would stop green cash from slipping out of the country’s grasp.

Keith Allott, head of climate change at WWF-UK said: “This private finance needs clear public policy signals, such as a decarbonisation target, to be unlocked – and that’s where, ironically, policy dithering on the part of a supposedly pro-business government is part of the problem, not the solution.”

Renewable energy bodies said they were alarmed by the BNEF figures confirming the drop in spending – but sadly not surprised. REA Chairman Martin Wright said: “These figures illustrate that capital is voting with its feet. The last few years has seen renewables emerge as a serious contender. Costs are falling, supply chains are gearing up and renewable energy is no longer a cottage industry. It is essential that swift, clear decisions are implemented by a Government united in the objective of keeping the lights on whilst sticking to its climate change objectives.”

The UK Government’s new strategy for efficiency is expected to ‘kick-start a revolution’ and save up to 22 power stations worth of energy by 2020.

DECC’s first ‘Energy Efficiency Strategy’ published today suggests the country could be saving 196TWh of energy in 2020 through “socially cost-effective” investment in energy efficiency. This could help cut emissions by around 41 Metric tonne of carbon dioxide equivalent and contribute towards reducing greenhouse gas by 80% by 2050.

The strategy is aimed at changing the way energy is used in different sectors such as housing, transport and manufacturing in the next few decades, with “immediate action”.

The new plan follows research by Consumer Focus released last week, which suggested investing in energy efficiency is one of the best ways to boost the UK economy, create more jobs and tackle fuel poverty.

Energy and Climate Change Minister Greg Barker said: “We have put energy efficiency at the very heart of the Government’s energy policy. Using energy more wisely is absolutely vital in a world of increased pressure on resources and rising prices. Not only can energy efficiency help save money on bills and cut emissions, it can support green jobs, innovation and enterprise.

“This is Britain’s first comprehensive Energy Efficiency Strategy and sets out the action we are taking now, as well as what we will do in the future to ensure the UK continues to be a global leader in reducing energy use.”

A £39 million grant from the Research Councils UK will fund five centres looking at what drives energy demand and how to change future behaviour. The Government will be working with John Lewis on an energy efficiency labelling trial next year which shows the lifetime running costs of household appliances.

According to DECC’s statistics, the energy efficiency sector already accounts for around 136,000 jobs and had sales of £17.6 billion in 2010/11. It also suggests sales in the sector have grown by more than 4% per year in the UK since 2007/08 and are expected to rise by around 5% per year between 2010/11 and 2014/15.

Just days into the role of Energy Minister after the Cabinet reshuffle, John Hayes MP promises he’s the man to give certainty to investors at the launch of Pembroke gas power station in Wales.