Utility Week

10 | 1ST - 7TH FEBRUARY 2019 | UTILITY WEEK Policy & Regulation This week MPs call for water 'mutual ownership' Water companies 'should be turned into co- operatives that would remain in the private sector' Labour has been pressed to transfer water into mutual own- ership as the route to reversing the industry's privatisation. In a debate on the future of the water industry, held in the House of Commons' Westminster Hall on 22 January, Gareth Thomas MP called for water companies to be turned into co- operatives that would remain in the private sector and continue to be regulated by a "more effective" Ofwat. The water suppliers' boards would be appointed by trusts composed of consumers and employees, which could issue bonds to buy back shares in the companies. The Harrow MP suggested the trusts would have to be underwritten through a government guarantee on loans or debt that would give them internal equity reserves to borrow against. This buffer would enable large unexpected investment needs to be met and could be replaced over time as the trusts accumulate profits that no longer need to be distributed to shareholders. And the new not-for-profit water companies would have to be protected against the risk of future demutuali- sation through an asset lock. Thomas, who is the chair of the Co-operative Party that is affiliated to Labour, also called for a "full review" of the industry's regulation, branding Ofwat "woefully weak", with English consumers carrying "little weight against the interests of distant investors". Luke Pollard, the opposition's shadow water minister, said he will be publishing Labour's proposals on the future of the industry in the "next couple of months". DB ENERGY Date for smart meter obligation proposed The government has proposed a start date for a new obligation on energy suppliers to install a smart meter when replacing a traditional meter or fitting one for the first time. In a consultation published last week, the Department for Business, Energy and Industrial Strategy (BEIS) revealed plans to activate the New and Replace- ment Obligation (NRO) on 31 March 2019. The government originally intended the obligation to come into effect in mid-2018 – on or a›er the end-date for SMETS1 installations. But the timetable has been set back by a series of delays to the SMETS2 rollout, which in turn has extended the deployment of SMETS1 meters. BEIS wants to introduce the obligation as soon as possible a›er 15 March – the last day on which the installation of SMETS1 prepay meters will count towards suppliers' duty to offer a smart meter to all households by 2020. The deadline for responses to the consultation is 19 February. ELECTRICITY Energy UK backs capacity market plan The boss of Energy UK has backed the government's "com- mon sense" response to the sus- pension of the capacity market, saying he is "confident that it offers a way out of this impasse". In a blog on the trade asso- ciation's website, chief executive Lawrence Slade said he can see "no reason" why auctions and payments cannot be resumed once the scheme is reapproved by the European Commission. BEIS is collecting payments from suppliers during the cur- rent standstill period, which will enable contract holders to receive the payments promptly if the scheme is reinstated. Slade said this was a "sensible move" that would avoid a situation in which "obligations just mount up in the meantime". ELECTRICITY Small generators discount is extended Ofgem has decided to extend a discount on transmission charges for small generators in Scotland by two years to the end of March 2021. The regulator said the exten- sion would maintain parity between the charging regimes in Scotland and the rest of Great Britain until enduring arrange- ments can be put in place following its ongoing review of residual network charges. In Scotland, 132kV networks form part of the transmission system, while in England and Wales they are part of the distribution system. Thomas: branded Ofwat 'woefully weak' Political Agenda David Blackman "The Scottish government is nearly £10m out of pocket" Last week's collapse of Our Power is far from the biggest to hit the energy supply market. The Edinburgh-based com- pany had 38,000 customers – dwarfed by the 290,000 who had accounts with Spark Energy, the biggest retailer to go bust so far. However it is the first of the recent wave of the public or vol- untary sector start-ups to go bust. Our Power was set up in 2016 with the aim of supplying cut- price energy to low-income social housing tenants in Scotland. pause for thought before giving the go-ahead to what looks like an increasingly risky venture. Ditto Jeremy Corbyn's Labour party, which pledged to set up a public-owned energy company in every region in its 2017 general election manifesto. The disappearance of Our Power, on top of the myriad private suppliers who have gone out of business in recent months, should be a caution- ary tale for the public sector's would-be energy players. The worthy venture ended in tears last week though, leaving the Scottish government nearly £10 million out of pocket and other social investors nursing as yet undisclosed losses. It will be a sobering lesson for Holyrood about the perils of the energy supply business as it contemplates setting up a new public-owned retailer for Scotland. This is already behind schedule, with consultation already due to have taken place. Our Power's demise can be expected to give the Scottish National Party administration, already reeling from the allega- tions against its former first minister Alex Salmond, further

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