DECC mid-year report 2013-14 – is it making reasonable progress?

DECCThe DECC is continuing to make good progress against its five key priorities set by the Coalition. The Energy Bill received Royal Assent on 18 December 2013 and is now named the Energy Act 2013.

This success was supported by the work completed over the period of April to September 2013, including the Energy Bill completing its passage through the Commons on 4 June 2013 with one of the largest majorities this Government has seen  – 396 for and 8 against.

The majority of its Structural Reform Priorities have been completed on time, and the two that are delayed are on track to be delivered.

This year has seen major progress by DECC on electricity market reform and an agreement to develop the UK’s first new nuclear power station in over 20 years. Renewable electricity is continuing to increase, helping to boost low carbon fuels which accounted for a record share of 37% of all generation in the third quarter of 2013. DECC also launched the Green Deal and are tackling fuel poverty through the Warm Home Discount which means that over 1.16m low income households will get £135 off their electricity bill this winter.

Among their priority programmes for this year are international climate change, electricity market reform and developing energy supplies from oil and gas, nuclear, renewable electricity and heat sources, taking steps to help commercialise carbon capture and storage, fuel poverty and the Green Deal and the Energy Companies Obligation (ECO).

On finance, the current expectation is that there will be an underspend of around £156m, or 4%, against the Departmental Expenditure Limit of £3.57 billion set at the Main Estimate. There are two main reasons for this:

£52m relates to the Green Deal programme where £170m of budget is ring-fenced to incentivise take-up of Green Deal measures. Initial levels of take-up have been lower than planned leading to underspends.

And the Nuclear Decommissioning Authority is forecasting underspends of £68m which it expects to surrender at the Supplementary Estimate in order to provide funding for security enhancement work in 2014/15 and 2015/16.

It is expecting the current Annually Managed Expenditure budget of £451.7m to increase by around £5 billion, mainly due to the annual re-valuation of the provision for the cost of nuclear de-commissioning. This is a similar level of change to previous years and reflects in part the effect of inflation on long term provisions.



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