Power Regulation

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Our Energy & Climate Change team comprises individuals with deep sectoral knowledge who have helped shape the regulatory regime for electricity and gas in GB and across the world. We have a team fully devoted to the energy sector that is one of the largest in the UK and a recognised leader in the field.  We are ranked in Band 1 for Energy in Legal 500. 

We have been advising in the energy sector for over 25 years and been at the forefront of creating many of the innovative and ground-breaking elements of the industry structures and markets, including writing the various electricity codes.  We have unrivalled knowledge of the sector-specific European and UK primary and secondary legislation.   

The team regularly advises on interactions and matters with economic regulators and related bodies (such as Ofgem, Ofwat, the Utility Regulator in Northern Ireland, BEIS and the CMA).   The team is recognised as a “go to” adviser for the sector in navigating industry and regulatory frameworks in the UK and across the world, with advisers who are steeped in an understanding of the legal, political and practical constraints faced by policy makers, regulators and the sectors they regulate.  

CMS’ range of advice spans from helping clients in responding to policy consultations and has significant success in raising legal issues in a way that will encourage regulators and policy makers to take submissions into account and ultimately reconsider their positions all the way through to judicial review and CMA appeals.  The team also regularly helps clients with correspondence with regulators, which can be particularly sensitive where these are in contemplation of a judicial review or regulatory appeal.   

Our recent experience related to power regulation includes:

New approaches to network regulation and regulatory models

  • National Grid Electricity Transmission on Ofgem’s proposed application of the “Competition Proxy Model” to the Hinkley-Seabank transmission line.
  • SSE Energy Networks on its response to Ofgem’s consultation on the application of the “SPV” model. 
  • NeuConnect and Greenlink on their responses to Ofgem’s consultation on potential variations to the “cap-and-floor” model to support project finance. 

Political and regulatory interventions in the sector

  • SSE Energy Services on its responses to Ofgem’s consultations on the default tariff price cap pursuant to the Domestic Gas and Electricity (Tariff Cap) Act 2018.
  • Utilita, the prepayment meter specialist supplier, on its (ultimately successful) request to the CMA to review the design of the prepayment meter price cap.  

Price controls and regulated revenue streams

  • Cadent Gas Networks on its the RIIO-GD2 price control and subsequent appeal.
  • Gas Networks Ireland on interactions with Ofgem (on licensing requirements) and with the Utility Regulator (on licence modifications), as well as on its response to the Utility Regulator’s consultation on the GT17 price control.   
  • AES UK and Ireland on its interactions with the Utility Regulator relating to the new ISEM Capacity Market on the island of Ireland , including the Unit Specific Price Cap. 
  • Confidential client on the rejection of requests for additional allowances under uncertainty mechanisms.

Regulator interactions

  • Confidential clients on Ofgem enforcement action in relation to alleged breaches of supply licences.
  • Confidential clients on regulatory investigations and enforcement actions under distribution and transmission licences
  • Confidential clients in relation to Ofgem audits in respect of renewable energy subsidies.

To find out more about other related services you can visit the Energy & Climate Change expertise section

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07/12/2023
COP28: how the law can unite, act and deliver the UN SDGs
The law, and the work of lawyers, should enable countries, communities and companies to deliver the changes needed to achieve the UN SDGs and the Paris Agreement. As COP28 urges us to unite, act and deliver, Advocates for International Development (A
Advising the Board

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08/12/2023
Key takeaways from Energy Day at COP28
As a young professional in the legal field, attending COP28's Energy Day was an eye-opening experience that provided valuable insights into the future of environmental policies and their potential impact. Day 6 of COP28 showcased a collective determination to address the pressing challenges of our time. The discussions emphasised the urgency of transitioning to sustainable energy sources, with a focus on innovation, collaboration and policy frameworks. Supply chain planning, streamlining approvals through a clear permitting process and advocating for mandatory carbon pricing were some of the other key points discussed in the various panel sessions we attended. Another noteworthy aspect was the emphasis on international co-operation and the role of legal frameworks in facilitating cross-border partnerships. Governments were urged to think strategically beyond the present, emphasising long-term planning for renewable energy expansion.  COP28 Key Takeaway  The key takeaway for me was not just the global agreements discussed but also amplifying the voices of those on the front lines – farmers, coal workers, the youth, indigenous people and others. What set this COP apart was its focus on showcasing these voices, by, for instance, dedicating a full day to discuss the impact of climate change on health. These voices are essential in translating agreements into on-the-ground success and bridging this gap between policy decisions and the real life experiences of those directly affected by climate change is our collective responsibility, ensuring the protection of our planet for present and future generations. The Impact on Legal Practice The outcome of COP28 may lead to more stringent regulations and compliance requirements, presenting both challenges and opportunities. Legal practitioners will play a pivotal role in navigating these complexities, offering counsel to businesses and other organisations seeking to align their operations with emerging environmental standards, one way of doing this would be through using contracts as a mechanism to de-risk. As we move forward post-COP28, the legal community's commitment to guiding clients through these evolving landscapes will be instrumental in ensuring progress in the renewable energy transition. In conclusion, COP28 has been a catalyst for reflection and action. It is an exciting time to be in the legal field, with the potential to be at the forefront of shaping legal frameworks that promote a more sustainable future.
30/11/2023
Views from the Energy Leaders’ Summit
Wednesday 6 December saw CMS host the Energy Leaders’ Summit on behalf of the Global Success Partnership at CMS Dubai. The event welcomed Edward Hobart, British Ambassador to the UAE, and Andrew Bowie MP, UK Minister for Nuclear and Net Zero, who shared their perspectives of the UK’s role as a global leader in climate action and energy transition, and the opportunities for collaboration with the UAE and other countries in the region. The panel discussion covered a wide range of topics on the various aspects of the energy transition - the role of innovation, finance, policy, and partnerships in achieving net zero emissions, and the challenges and opportunities for industrial decarbonisation and reskilling.  Thank you to the panellists:Munir Hassan, Head of Energy & Climate Change, CMSAnnika Ramsköld, Chief Sustainability Officer, VattenfallAngela Churie Kallhauge, Executive Vice President and Head of the COP28 Delegation, Environmental Defence FundJan Spin, President of Americas, Blue Green Water TechnologiesAnna Hancock, Executive Director, Pollination Group, AustraliaLeon Kamhi, Executive Director, Head of Responsibility, Federated Hermes Limited A huge step forward in the reduction of methane The Global Methane Pledge made at COP28 has been joined by over 100 countries and aims to accelerate the implementation of existing and new measures to reduce methane emissions, such as capturing and using methane from landfills and oil and gas operations, improving waste management, and promoting low-emission agriculture. The World Bank is set to roll out a minimum of 15 country-led programs within the next 18 months to slash up to 10 million tons of methane (over investment lifespans). So, lots of positive messages about reducing methane. The sense on the panel was that it was a huge step forward that methane was discussed to such an extent and the commitment that some of the largest oil companies have made to reduce methane could be a game changer. The International Energy Agency (IEA) and the Environmental Defense Fund (EDF) have an important role in monitoring and verifying the methane reductions using satellite data and we heard about the need for more funding and innovation to support methane abatement in low- and middle-income countries, especially in the oil and gas sector.  Reskilling is a huge opportunity  The panel discussed the social and economic impacts of the energy transition, and the need for a just and inclusive approach that considers the needs and aspirations of the citizens and the workers. We heard about the importance of reskilling and upskilling the workforce, sharing best practices and lessons learned from different countries and regions. Where the infrastructure can be easily transformed to support clean energy, this reskilling presents an opportunity to both businesses and local communities. However, panellists reflected that this was not always possible, so some communities may struggle to thrive if their current livelihoods cannot be transitioned to clean energy. The role of investors and financial institutions There was considerable discussion about the role of investors and financial institutions in supporting the transition, and the need for consistent and credible disclosure and reporting stand­ards. There are challenges and opportunities for creating new revenue streams and business models, and the role of carbon markets and social bonds in financing the transition. For the investment infrastructure to be created so that investors can support governments in delivering their programmes, it needs to be easier for private investment to entertain the risk. Blue Green Water Technologies remove harmful alga blooms from lakes and oceans. These projects are often financed by companies using carbon credits and this source of funding has enabled local communities to benefit from cleaned bodies of water. Biodiversity has dramatically increased, as has the value of land. Creative funding solutions can benefit many different stakeholders by enabling projects such as these. Climate risk is an accelerating risk, and this should be considered by financial institutions. As they calculate the value of climate risk and its impact on their capital allocation, remuneration and expenses, the valuations must adjust. The view on disclosures and standards was that their have a role, but any investment should lead to a change in behaviour, not just to be disclosed as part of disclosure requirements. Making disclosures is a huge investment for a business and so the sense was that businesses should avoid measuring in a certain way purely for disclosures instead of really delivering change and solutions. The role of governments Finally, we heard about the role of governments in facilitating and enabling the transition, and the need for collaboration and cooperation at all levels. We learned about the importance of setting clear and ambitious targets and policies and aligning them with the global goals and commitments. We also heard about the importance of engaging and empowering the stakeholders, especially the non-state actors, and creating trust and confidence in the transition. COP28 has a role as a platform for showcasing solutions and forging partnerships. The Leadership Group for Industry Transition is one example of how governments can be brought together with companies and civil society to support and accelerate the transition to net zero emissions in industry and create new markets and jobs. Communities will make the difference The discussion closed with some reflections on the importance of different communities in making the energy transition happen. Communities of all types, such as those who attended the Energy Leaders’ Summit, will come together to use the technology available to translate the deals and agreements into action. We need government support to remove the brakes, and we need actors of all types to come together. We need people to question, to demand more and to change behaviour.  
07/11/2023
Funding + reskilling + data + consumer engagement = energy transition...
 
07/11/2023
COP28 - Climate finance and the launch of Climate Investment Funds (CIF)...
Climate finance took centre stage on the fourth day of the COP28 climate summit in Dubai. Building on the obligations of The Paris Agreement, banks, regulators and top officials at the COP28 climate summate committed to progressing the mobilization of climate finance from a variety of sources, including public, private and alternative sources of financing.  
06/11/2023
“Debt-for-nature” swaps: a huge potential boost for the debt capital markets?
 
06/11/2023
Adaptation finance: more clarity for the financing and development of low...
 
01/11/2023
COP28
CMS contributed to the conversations at, and around, COP28 by hosting a series of events to collaborate, debate and look forward. Here, our experts publish soundbites and commentary to share their perspectives on the impacts of the announcements and agreements. 
01/11/2023
COP28: how the law can unite and act to deliver the UN SDGs
Thursday 7 December saw a panel event to discuss COP28: how the law can unite and act to deliver the UN SDGs, hosted by Advocates for International Development and supported by Clifford Chance, CMS, Kirkland & Ellis and Linklaters.
20/10/2021
UK Energy Sector: Summer of Change
The summer of 2021 may well shape the UK energy sector (and the related sectors it impacts) for many years to come. Ofgem and BEIS released over forty consultations from June to September. Some of these...
14/10/2021
Energy Supply Crisis - refresher on possible outcomes
The UK is currently facing an energy supply crisis. Wholesale energy prices have sky-rocketed in recent weeks with the regulatory price cap remaining unchanged. This has contributed to, as of October...