Key Facts

• The clause introduces part 2 of the Bill and gives a power to the Secretary of State to make regulations about revenue collection contracts.
• Clauses 16 to 24 set out further details regarding what the regulations may cover, including duties of the counterparty, payment amounts, and enforcement procedures.
• Regulations relating to clauses 16 to 22 and the first regulations made under clauses 23 or 24 will be subject to affirmative procedure.
• The Bill concerns setting up revenue collection contracts and a counterparty to hold collected revenue.
• During the construction phase, the nuclear company absorbs revenue from the counterparty to underpin costs within the allowable costs ceiling.
• During production, if the company's earnings exceed allowed parameters, excess funds return to the counterparty or customers; conversely, additional funding comes in during shortages.
• Clause 16 enables the Secretary of State to designate a revenue collection counterparty.
• The Low Carbon Contracts Company is intended to fill this role.
• The designated authority will be responsible for determining amounts to be paid and communicating them to the counterparty.
• Amendment 14 proposes changing 'may' to 'must' in clause 17(2).
• The amendment aims to make regulations obligatory for revenue collection contracts.
• The current wording allows flexibility in developing the regulations.
• Clause 18 builds on clause 17 by giving the Secretary of State power to direct revenue collection counterparties.
• Regulations can set out circumstances for making directions to contract, including when and under what terms contracts should be offered.
• The power is adapted from section 10 of the Energy Act 2013 but tailored for bespoke arrangements.
• Amendment 15 aims to prevent electricity suppliers from recovering costs related to the RAB revenue collection fund from Warm Home Discount recipients.
• Warm Home Discount provides £140 annually to eligible customers, with a planned increase to £150 per annum.
• The RAB model will add at most a few pounds per year to typical household energy bills during construction and less than £1 per month on average during the full construction phase.
• The amendment seeks to address how nuclear RABs might impact customer bills.
• A £10 increase on average dual-fuel bill payers is expected under the RAB model.
• The warm home discount has not kept pace with inflation since its introduction in 2011.
• Bulb Energy, with 1.7 million customers, went into administration recently.
• Since August of the current year, 23 energy suppliers have gone bankrupt.
• Clause 19 allows the revenue collection counterparty to set terms for financial collateral without independent scrutiny.
• The Bill seeks to replicate the successful contract for difference regime that has operated effectively since 2014.
• Ofgem or its equivalent regulator will oversee the reasonableness of collateral requirements set by the Secretary of State.
• A letter providing further details on consumer and company protection mechanisms under the Bill's regulatory framework is requested.
• Amendment allows persistent non-payment by electricity suppliers to be referred to Ofgem.
• OFGEM could place an energy supplier’s licence under review in cases of persistent non-payment.
• The renewables obligation is still active until 2027.
• Clause 20 seeks to ensure reimbursement for electricity suppliers in cases of overpayment or underutilization.
• The clause allows for reconciliation processes and repayments based on actual versus expected market shares.
• Subsections (1) and (2) allow regulations to be made requiring the counterparty to make payments to suppliers, subject to the affirmative procedure.
• Amendment 17 targets Clause 21 of the Nuclear Energy (Financing) Bill.
• The amendment requires the Government to consider alternatives before sums held by a revenue collection counterparty are paid into the Consolidated Fund.
• Subsection (5) of Clause 21 states that provisions may be made about whether sums should or should not be paid into the Consolidated Fund.
• Clause 21(5) of the Bill suggests surplus funds held by the revenue collection counterparty may go into the Consolidated Fund.
• The amendment aims to restrict this, allowing payment into the Consolidated Fund only if there are no alternatives available.
• An example given is a loan provided during the COVID pandemic through the Low Carbon Contracts Company.
• Clauses 23 to 30 relate to technical matters.
• Labour party has no objections to these clauses.
• Further consideration is adjourned until Thursday 25 November at half-past Eleven o'clock.