Utility Week

8 | 11TH - 17TH JANUARY 2019 | UTILITY WEEK Policy & Regulation This week Four suppliers given price cap derogation Ofgem exempts tariffs where consumers have chosen to contribute to renewable generation Three energy suppliers offering renewable energy tariffs have been offered temporary deroga- tions for renewable standard variable tariffs (SVTs) from the default tariff cap that came into force on 1 January. The derogations are for SVTs offered by Good Energy, Ecotricity and Green Energy UK, where consumers have chosen a tariff that contributes to renewable generation. Consumers on default tariffs with these suppliers will still receive price protection, Ofgem confirmed. These derogations came into effect on 1 January and will remain, unless otherwise revoked or amended by Ofgem, until 31 March this year. At that point, the companies will need to submit further evidence to the regulator to achieve permanent derogation. Meanwhile, Pure Planet was granted temporary directions for "alternative compliance assessment for the default tariff price cap". This is on the basis that the company's non-standard charging structure means that applying the price cap would "not have been in the best interest of most of its consumers", according to Ofgem. This derogation will remain in effect until 31 Decem- ber this year, unless revoked or amended by Ofgem. Green Energy UK managing director Doug Stewart said: "It is interesting that the three longest standing independent suppliers, which also happen to be green, all sought and obtained a derogation from the price cap. "This indicates that both they and Ofgem recognise the true cost of supplying future energy." AJ WATER Sector disappoints over transfer efforts Ofwat has expressed disappoint- ment at water firms' progress in efforts to develop inter-regional transfer infrastructure. In its response to the House of Commons Environment, Food and Rural Affairs select commit- tee's recently published report on water regulation, the regula- tor backs the "important role" transfers can play in ensuring efficient and resilient supplies. But water companies have done too little to develop a new water grid that would enable supplies to be shied from areas where water supplies are abundant to those at greater risk of shortages, says Ofwat. "We have made it clear to water companies that we are dis- appointed in the progress in this area and believe that there are economic, environmental and resilience benefits to be achieved from planning more effectively across company borders." Ofwat identifies co-ordination of suppliers, environmental and water quality constraints, and commercial practice as the key barriers to greater trading of water. ELECTRICITY Honesty urged over capacity market The boss of Tempus Energy has slammed the government for refusing to reform the capacity market, while urging ministers to "start being honest" with investors and parliament. The scheme was brought to a standstill in November last year aer an EU court overturned a 2014 decision by the European Commission to approve the mechanism under state aid rules. Shortly aerwards, energy and clean growth minister Claire Perry told parliament the judgment was made on "procedural grounds" and did not constitute "a challenge to the nature of the UK capacity market mechanism itself ". In an open letter to the Department for Business, Energy and Industrial Strategy (BEIS), Tempus Energy chief executive Sara Bell described Perry's statement as "misleading". She said judges upheld Tempus Energy's legal challenge against the capacity market because they had "serious doubts" over the compatibility of several "substantive features" of the mechanism with state aid guidelines. "We urge the government to stop pretending that the judg- ment does not impact upon the policy design and to start being honest with investors and parlia- ment," wrote Bell. "Only then can we get the policy right and rebuild market confidence." BEIS has yet to respond to a request for comment. Stewart: true cost of supplying energy recognised Political Agenda David Blackman "A super ministry made more sense before the NIC" The Sun is not normally the first place one would look for stories about Whitehall reforms. But last week, Britain's top selling redtop showcased an exclusive on proposals to create a Ministry of Infrastructure. It said chief secretary to the Treasury Liz Truss is examining plans to merge the BEIS (busi- ness, energy and industrial strategy), transport and culture departments into a new Ministry of Infrastructure when the government carries out its wider of the National Infrastructure Commission. The arms-length body, now under the leadership of ex-Olympics supremo Sir John Armitt, is getting its message across in Whitehall. For energy, scrapping BEIS would mean the fih change of ministry in just over a decade, distracting attention from policy reforms while further diluting the industry's voice within Whitehall. Utilities will be hop- ing this is one of those tabloid stories that can't be trusted. spending review later this year. The idea is to bring under one roof many of the key infrastruc- ture areas such as energy, trans- port and telecommunications. In addition, the move could stream- line the operation of Whitehall by cutting some of the overheads involved in running separate government departments. The idea, which smacks of jostling for the looming Conservative leadership race by Philip Hammond's ambitious No 2, was quickly shot down by a No 10 Downing Street keen to be seen in charge. The concept of a super ministry probably made more sense before the establishment

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