The Offtaker of Last Resort (OLR) will support independent renewable generators by providing them with a guaranteed route to market and improving their ability to raise project finance.

My officials have worked closely with developers and other stakeholders in working up the OLR proposals. The policy design is already at an advanced stage, and the detail of the proposals has been recently consulted on. We are on track to deliver the final policy and introduce enabling regulations ahead of first allocation

of contracts for difference (CfDs). CfD applicants will have a high degree of clarity about the arrangements for OLR in advance of the first auctions.

The Government considers that the proposed policies are compatible with EU state aid guidelines on competitive bidding and is currently engaging with the European Commission on the matter.

My officials have worked closely with developers and other stakeholders in working up the Offtaker of Last Resort proposals. The policy design is already at an advanced stage, and the detail of the proposals has been recently consulted on. We are on track to deliver the final policy and introduce enabling regulations ahead of first allocation of CfDs. CfD applicants will, therefore, have a high degree of clarity about the arrangements for OLR, well in advance of the first auctions.

After the regulations come into force, time will be required to establish the processes for allocation of backstop PPAs and apportionment of their costs between licensed suppliers, but we do not consider that this will constitute a significant impediment to projects which secure CfDs through the auction. Furthermore, the OLR has been designed to be a last resort and generators will need to have commercial offtake arrangements in place in order to secure investment.

The OLR will support independent renewable generators by providing them with a guaranteed oute to market and improving their ability to raise project finance.

My officials have worked closely with developers and other stakeholders in working up the Offtaker of Last Resort proposals. The policy design is already at an advanced stage, and the detail of the proposals has been recently consulted on. We are on track to deliver the final policy and introduce enabling regulations ahead of the first allocation of CfDs. CfD applicants will, therefore, have a high degree of clarity about the arrangements for OLR, well in advance of the first auctions.

Auctions can be used to drive value for money once the market is sufficiently developed. We consider that market conditions are such that for some, more established technologies this will be the case. For established technologies, the proposed move to competition builds on the strong progress on cost reduction and the well-developed pipeline. For less established technologies, our aim is to ensure that they can deploy at levels which enable continued cost reduction and which ultimately support cheaper deployment in the long-term.

We continue to develop and implement our detailed proposals for competitive allocation of CfDs, which has the potential to improve value for money, encourage new entry and drive innovation. In developing our proposals we have also been mindful of the final EU Guidelines on State aid for environmental protection and energy 2014-20 published on 9 April, which indicate the need for a move to competitive processes for some technologies.

The Offtaker of Last Resort (OLR) mechanism will increase competition and reduce PPA discounts by enabling independent generators and lenders to rely on shorter-term PPAs and a wider variety of PPA counterparties. Powers were taken in the Energy Act 2013 to enable the establishment of the OLR. We are minded to report on the OLR scheme annually, and to undertake a comprehensive review of it at the end of the first EMR Delivery Plan in 2018-19. Annual reporting would cover a range of market performance measures, including the level of competition in the PPA market.

We have always been clear that auctions can be used to drive value for money, once the market is sufficiently developed. As set out in the ‘Consultation on Competitive Allocation’, published by the Department on 16 January 2014, we consider that market conditions are such that for some, more established, technologies this will be the case from the start of the allocation of contracts for difference (CfDs) under the enduring arrangements.

The Department launched a consultation on our approach to competitive allocation of Contracts for Difference (CfDs) in January 2014. This included proposals to move to auctioning of CfDs from the first allocation this autumn. We carefully considered the responses to the consultation before confirming our policy position in the Government Response published on 13 May 2014. Competitive allocation will deliver renewable energy at a lower cost for consumers.

In developing our proposals for the move to competitive allocation, my officials have also worked closely with developers and other stakeholders, including representatives of independent renewable energy generators.

In particular, we are introducing the Offtaker of Last Resort (OLR) to support independent renewable generators by guaranteeing a route-to-market and therefore improving their ability to raise project finance. The policy design is already at an advanced stage, and the detail of the proposals has been recently consulted on. We are on

track to deliver the final policy and introduce enabling regulations ahead of the first allocation of CfDs. CfD applicants will, therefore, have a high degree of clarity about the arrangements for OLR well in advance of the first auctions.

Her Majesty’s Government is acutely aware of the difficulties people have experienced with the price of liquid petroleum gas and heating oil. The price of LPG and oil is influenced by a range of factors, including crude oil prices (the major factor), refinery capacity, stock levels, distribution costs and retail margins.

We believe that the consumer is best served by open competition between companies. The Office of Fair Trading studied the heating oil market in 2011 and found few competition concerns. Most areas of the UK are supplied by a variety of heating oil suppliers and there are low barriers to entry for new businesses who may want to compete. The OFT study also commented on the generally positive initial impact of the Competition Commission Orders from 2009 to make it easier for domestic bulk LPG consumers to switch supplier, and there is a statutory duty to keep under review the effectiveness of and compliance with these Orders.

My Rt. Hon. Friend the Minister of State for Energy will chair a third Ministerial Roundtable meeting on heating oil and LPG supply on 21 May. The Roundtable brings together a wide range of interests including Government, regulators, advisory and charitable bodies, the fuel supply industry and others to work together to improve the security and affordability of off-grid fuel supply.

The Government is committed to ensuring that a broad range of developers and projects are able to access the CfD, and is introducing the Offtaker of Last Resort (OLR) to guarantee independent renewable generators a route to market and improve their ability to raise project finance. Ultimately the financing of individual projects is a matter for developers. Projects applying for CfDs will be at different stages of development, including the extent to which they have engaged with and/or agreed terms with financiers. However, the CfD offers a number of important advantages over the renewables obligation, including providing developers and their financiers with the certainty of a private-law contract which will be awarded to successful projects years ahead of the point at which some projects can accredit under the renewables obligation.

The decision to offer a dual fuel discount to customers who take a gas and electricity supply from one supplier is a commercial matter for the companies concerned. The discount reflects savings made by the company by combining administrative costs of providing the two separate supplies. Dual fuel discounts typically range from £10 to £25 per year. It would not be appropriate for Government to intervene by requiring suppliers to reduce electricity prices for just one specific segment of customers.

There is already legislation, the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), which requires traders to provide consumers with the information they need to make informed decisions. The regulations prohibit commercial practices which omit or hide material information which the average consumer needs, according to the context, to decide how they meet these obligations in relation to the prices they charge, but having a clearly visible price list would be a relatively easy way of ensuring that consumers have access to relevant information. The CPRs also make it a criminal offence to give misleading price information.