Utility Week

UTILITY WEEK | 19TH - 25TH OCTOBER 2018 | 21 Operations & Assets regulator implies that there is a need for a policeman to hold to account – or if nec- essary arrest – the offenders, who are the utility companies. "That creates an environment in which there is a natural presumption against utilities." Armitt said he believes the role of the reg- ulator should be one of a "facilitator" – the person in the middle between customers and suppliers. As previously mentioned, the NIC has been instructed by the Treasury to carry out a wide-ranging review of regulation, encom- passing water, energy and the telecoms industries as set out in the NIC's National Infrastructure Assessment (NIA). In a speech about meeting the UK's future infrastructure needs, Armitt said: "As we examine all of this, we will keep a watchful eye on ensuring that bills are kept afforda- ble, and vulnerable customers are protected. "We will want to hear from you – the regulators and the industry – to hear your experiences, and your views of how the cur- rent system is working and how it may be improved. This will complement the NIA and help make sure it can be delivered. "Together, they have the potential to offer the best chance we have to increase infra- structure investment and set the conditions to make sure that every pound goes further." Resilience Armitt also announced that the NIC will be carrying out another study over the next 12 months on resilience, which he said it is cur- rently in discussions about with the Treasury. "The advantage of us doing that is it binds the Treasury into what we produce. If we went off and did it ourselves without hav- ing the Treasury on board… it makes it easier for them to walk away from it aerwards. BREAKOUT SESSIONS Vulnerability Vulnerability was a key concern in the breakout session on how to build trust and confidence with consumers on day one of Utility Week Congress. Features editor Lois Vallely was joined on stage by Steve George, customer services director at South East Water, Ved Sen, digital evangelist at Tata Consul- tancy Services, and Adam Scorer, chief executive of National Energy Action. All three were keen to high- light how critical gaining the trust of customers is in an age of low confidence in the utilities sector. Scorer posed the question of how society can build a social dividend for innovation "from the beginning" to help vulnerable customers sooner rather than later. "You can design solutions for vulnerable consumers through innovative ways, especially if you can remove yourself from the attraction of bright shiny things," he said. Innovation On Wednesday aernoon, acting content director Denise Chevin hosted a breakout session on the role of regulation in innovation and was joined by David Satti, head of network regulation at Wics; Randolph Brazier, head of innovation and development at the Energy Networks Association; and Stephen Parker, regulations director at Northern Gas Net- works. Satti used case studies into environments of fear to highlight his point that behaviours change for the worse in a fearful environ- ment. He posed the question, can we be innovative if we fear failure? "An environment of fear doesn't bode well, if we want innovation," he said. Removing the fear of failure, he argued, is a critical step in creating an environment that allows for collaboration and for the industry to take risks in order to innovate. "If it's something we agree is worth doing and there are questions to be answered, we stand more chance of binding them to the recommendations." He wouldn't be drawn on further details about the study, but undoubtedly it will be of keen interest to all utilities, since resilience in all its forms is a big focus for companies. In his speech, Armitt called on utilities and regulators to back the recommendations it has made to government about the investment needed for infrastructure. He stressed that the investment propos- als outlined in the NIA, published earlier this year, are not part of an "unaffordable wish list". However he warned that some tough decisions had to be made and some "trade- offs", which would mean the assessment will "not suit everyone". Armitt also discussed the importance of a resilient system of water supply and the potential need for new reservoirs. He highlighted leakage as a concern and explained that 20 per cent of mains supply is lost every day. "We want to see the industry halve leak- age by 2050 with Ofwat agreeing five-yearly commitments from each company and then reporting on the progress," he said. "It's therefore encouraging to see companies including Thames and Southern say they plan to rise to this challenge." Armitt also reiterated the NIC's plea to the government to back renewables over nuclear. The NIC has said the government should agree support for no more than one nuclear power station beyond Hinkley Point C before 2025. "We have set a clear target for at least 50 per cent of our electricity to come from sources including wind and solar by 2030." The NIC has also looked for alternatives to gas. "For heat in the future we have a choice – it's either going to be hydrogen or heat pumps, it cannot be natural gas," he said. Armitt also emphasised the need for the electricity system to be ready for electric vehicles. "We want to see Ofgem playing a key role in this," he said. The government has until July 2019 at the latest to respond to the NIA. Armitt said: "We cannot rest on our laurels – having produced that report we must make the case time and time again for its implementation." If the recommendations are to become a reality, the NIC needs support from utilities to make it happen, he urged. In a panel dis- cussion aer his talk, Armitt asked: "How do we persuade politicians that there is more to regulation than simply the lowest cost? "We need to ensure resilience, so people can have the facilities when they need them and pay a fair price."

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