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< Should regulator punish or encourage utilities to drive good behaviour? | 'Wire we waiting' asks National Grid transmission boss >
Large gas storage schemes need help with planning
Large gas storage projects are having a hard time under the current planning regime . Mothiur Rahman hopes the IPC will resolve the problems.
In the face of declining North Sea gas production, the UK's limited gas storage capacity and the effect this has on security of energy supply is an issue of national importance. Despite a clear need for more gas storage capacity, there have been recent refusals to grant planning permission to create underground gas storage facilities.
One of the major reasons for introducing the Planning Act 2008 was to ensure that nationally significant infrastructure, such as underground gas storage projects, passed through the planning system without unnecessary uncertainty and delays. However, applications under the new system cannot be made until the relevant National Policy Statements have been designated (and procedural regulations implemented).
Anyone seeking to promote a new underground gas storage scheme faces a dilemma: should they wait to apply for projects through the new system or is it a case of better the devil you know? RPS is working on behalf of Centrica to develop offshore gas storage in the Bains Gas Field. It believes it makes sense for promoters to press ahead now rather than wait for the new system to be fully implemented, citing as a rationale the current strong national policy for additional gas storage.
Certainly it is true that current government policy supports the need for increased gas storage. The 2007 Energy White Paper highlighted the need for it, as did the 2003 Energy White Paper. In May 2006, a ministerial statement was made to raise awareness of the issue and to provide guidance on national policy to local planning authorities who were making the decisions. And as recently as this February, energy minister Ed Miliband said to the Committee on Energy and Climate Change: "If you are asking me, do we need more gas storage in the future? I would unequivocally say yes."
Yet, notwithstanding this supportive national policy, there have been two recent refusals to grant planning permission for gas storage schemes, and a third decision is pending. In October 2007, following a public inquiry, the secretary of state refused to grant permission to Canatxx to create storage facilities in the Preesall salt deposits in Lancashire. Reasons included insufficient information regarding geological modelling and risk assessment. Canatxx has since made a fresh planning application at the same site.
Refused permission
More recently in December 2008, Cheshire County Council refused planning permission to King Street Energy (a subsidiary of NPL) for its gas storage project at King Street, near Rudheath. In refusing the application, the pumping of brine into the Mersey Estuary was highlighted by the planning committee as an unsustainable measure contrary to its policies. King Street Energy has appealed the decision and an inquiry is to be held later this summer.
In the third case, Eon is currently awaiting a decision by East Riding of Yorkshire Council on its underground gas storage project at Whitehill in Aldbrough. That application was made more than two years ago.
These three cases, in the three areas in the country with suitable salt strata for creating the caverns, highlight that it is not all plain sailing when applying to local planning authorities to implement projects, even when they have national policy to support them. Under the current regime, what should happen is that national policy should be reflected in each regional spatial strategy, which in turn should be reflected in each local authority's development plan documents - a "trickle down" effect of national policy into the local planning framework.
In addition, when making their decisions, local authorities should take national policy into consideration as a "material consideration". However, what weight to accord to national policy is completely at the local authorities' discretion.
Benefit
Ultimately, local planning authorities create a development plan for the benefit of their local communities. This might in some instances create a tension with national policy. Members of the Cheshire planning committee seemed to be aware of this tension when refusing consent for the King Street development. The chairman stated: "I find myself worrying considerably about the national need for gas and the local situation and I do not like the thought that the County Council should be thought of as 'nimbys'."
The new system - the Planning Act 2008 regime - comprises three key elements to replace the existing myriad consents required for a major project. The first element consists of National Policy Statements. The second is the Infrastructure Planning Commission (IPC). Lastly, there is the Development Consent Order (DCO), which is an entirely new form of authorisation. A model form of the DCO is out for consultation. It is substantially modelled on orders made under the Transport and Works Act 1992 and the Harbours Act 1964.
A National Policy Statement for gas infrastructure should be out for consultation later this summer with a proposed designation around April 2010. In terms of the consents required for gas storage, the Planning Act removes the need for planning permission for mining to create the salt cavities for the storage of gas, or for a consent under the Gas Act 1965 for storage of gas in natural porous cavities. The IPC can, in addition, deem Hazardous Substances Consent to be granted at the time of granting the DCO.
The Planning Act sets out a duty on the IPC to make its decision within nine months of an application. In terms of decisions by inquiry this is fast and, should it be met, would be an advantage of the new system. The inquiry into the Canatxx application opened on 11 October 2005 and completed on 5 May 2006. Canatxx then had to wait nearly another year and a half before a decision was made by the secretary of state, only for it to be a refusal.
Crucial change
Another crucial change under the new rules is that the IPC will have to decide the application in accordance with any relevant National Policy Statement, except in limited defined circumstances. The most important of these limited circumstances is if the IPC considers that the adverse impact of the proposed development would outweigh its benefits. This is the important planning discretion given to the IPC, and the manner in which it interprets this test will be crucial to determining the effectiveness of the new system.
However, the key point is that national policy features as the pre-eminent element of the decision-making process. It is national policy, as embodied in the National Policy Statements, which become the heart of the system, not the development plans of local authorities. Indeed, the Planning Act does not specifically require the IPC to have regard to the development plans of local authorities, although local authorities are allowed to submit a local impact report to which the IPC must have regard. The IPC must also have regard to any other matters which it thinks are "both important and relevant to its decision". This may include development plan policies, but again that is at IPC discretion rather than a duty.
So while the town and country planning regime has the advantage of familiarity, and while any new regime carries the risk of uncertainty, promoters of new gas storage schemes should take comfort from the changes. A statutory test that puts the national interest first and foremost should give promoters greater confidence of obtaining the necessary consents. This will be particularly valuable where there might be considerable local opposition to a project, or where local policies may not accord with the project.
The present government seems to be fully committed to implementing the Planning Act regime. A variety of implementing regulations are currently out for consultation and draft National Policy Statements should follow later this summer on non-nuclear energy, including gas infrastructure.
Mothiur Rahman is a senior associate at law firm Bircham Dyson Bell. Email: mothiurrahman@bdb-law.co.uk
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