Utility Week

UTILITY WEEK | 26TH OCTOBER - 1ST NOVEMBER 2018 | 21 Operations & Assets Operations & Assets turbine, solar panels and sewage – heated at high temperatures to pro- duce biogas, which is then converted into electricity – for many years. "Poo power", together with wind and solar power, generated more than one-fih of the company's energy needs last year, reducing greenhouse gas emissions and saving the equiva- lent of £30 million in energy costs. Abbey Mills pumps around 230,000 litres of wastewater a day on to Beckton sewage works – the equivalent of about 100 Olympic swimming pools – and can process four times that on rainy days. Work on the cable project is expected to be completed in mid-2019. If you have an asset or project you would like to see featured in this slot, email: paulnewton@fav-house.com Market view Clarifying energy retail standards Mark Bartholomew says making it clear to energy suppliers what the minimum standards are will benefit them and their customers. F ollowing the recent collapse of Iresa and other chal- lenger suppliers, Ofgem's decision to review its approach to issuing energy supply licences, includ- ing the criteria against which licence applications are assessed, may seem a bit like shutting the door aer the horse has bolted. But it presents an opportunity to clarify regulation in retail supply, which must be welcomed. The recent supplier failures have highlighted issues regarding financial stability and the levels of customer service in the sector. Establishing some objective crite- ria in these areas for the purposes of market entry and ongoing monitoring might not follow the current trend towards more principles-based regulation, but should help ensure greater transparency and certainty for both energy suppliers and their customers. The current arrangements for obtaining a supply licence do not require the applicant to undergo extensive vetting but are aimed instead at maximising market entry, to support competition and innovation. This is intended to reduce the dominance of the "big six", but in some cases may have resulted in a disproportionate amount of Ofgem's time being spent assessing supplier performance. If Ofgem decides to vet prospective suppliers, it will need to set out minimum standards that are both meas- urable and objective, so it is clear to new entrants what will be expected of them. Imposing specific requirements aer a supplier has become operational for the purposes of performance monitoring risks deterring new entrants and therefore reducing competition in retail supply. Ofgem will also have to ensure it does not set the bar for minimum performance standards too high, not only because this may deter new entrants, but also because non-price competition is a way in which suppliers differ- entiate their offerings. Setting standards too high would remove the potential for competition on service quality. The scope of Ofgem's review will apparently include the possibility of greater powers to revoke the licences of suppliers whose poor performance adversely affects consumers. The current powers are appropriately limited in scope and require a process to be followed in which revocation is very much a last resort. Any change in this area will need to be balanced and proportionate or competition may be affected. Ofgem's consultation will give all energy providers an opportunity to influence industry reform. The review will enable the minimum standards expected of energy sup- pliers to be clarified in a manner that will benefit both suppliers and their customers. Mark Bartholomew is a partner and energy sector specialist at law firm Shakespeare Martineau

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