Utility Week

UTILITY WEEK | 22ND - 28TH FEBRUARY 2019 | 13 Policy & Regulation This week NIC asks how to improve regulation Chancellor Philip Hammond has asked the NIC to assess utilities' current regulatory framework The National Infrastructure Com- mission (NIC) is seeking views on how the utilities regulation system is working and whether it has "systematically failed or suc- ceeded" in several key areas. Chancellor Philip Hammond has asked the NIC to assess what changes may be needed to the existing regulatory framework to facilitate future investment, pro- mote competition and innovation and meet the needs of consumers. The review will focus on energy, water and telecoms and form part of the NIC's perspective for the next 30 years. John Armitt, chairman of the NIC, said it wants to hear how the current system of regulation is working and how it could be improved "to deliver both good- quality services and world-class infrastructure". The study is expected to consider whether there is regulatory consistency between the sectors, and the relationship between regulators and the government. Hammond said: "Technological change is having a transformative effect across the economy and regulators must be able to respond to keep the UK at the forefront of these advances. That's why I've asked the National Infrastructure Commission to look at how our regulators can prepare for and adapt to this change. Their findings will be key in helping ensure we rise to these challenges and remain fit for the future." The call for evidence will run for eight weeks until 12 April. Responses must be no longer than 20 pages and should be emailed to: regulation@nic.gov.uk KP ENERGY 'No clarity' about Brexit preparations Energy companies are getting "no clarity" from the govern- ment about what they should do to prepare for a no- deal Brexit, according to the Confederation of British Industry (CBI). Tanisha Beebee, senior policy adviser on energy and climate change at the business body, said the notices being provided by BEIS about the UK withdraw- ing from the EU without a deal on 29 March were "very, very basic". At a briefing organised by the Energy and Climate Intel- ligence Unit (ECIU), she said the department has been holding workshops, including in North- ern Ireland and London, about energy Brexit preparations. But the energy sector is "not getting a lot of information" about what it should do to pre- pare for a "no deal". ENERGY Helm 'amazed' at silence on price cap Professor Dieter Helm has admit- ted he was "amazed" about the lack of debate over how big a proportion of policy costs con- tributed to the recent energy price cap hike. Giving evidence to the House of Lords economic affairs com- mittee last week, the author of the government's recently commissioned cost of energy review commented on Ofgem's announcement that the cap on default tariffs would rise by £117 to £1,254 in April. Of this increase, £14 is accounted for by environmental and social policy costs, such as renewable energy subsidies. Helm said: "In the recent price increase, I was amazed how little attention was paid to how much bills were going up in this round because of extra legacy costs." He said the cost of energy ought to be falling and "legacy costs" should be socialised". ENERGY Ofgem to issue URE with final RO order Ofgem is proposing to issue URE Energy with a final order to pay its Renewables Obligation (RO). Last year it was revealed the supplier had failed to meet its RO by not paying into either the buyout fund by 1 September 2018 or the late payment fund by 31 October. URE, along with Manchester- based Eversmart Energy, were placed under investigation and ordered to deliver all outstand- ing RO payments by 31 March 2019 through monthly instal- ments. URE owes the regulator £209,013.87 including interest by the end of March. John Armitt: how can regulation be improved? Political Agenda David Blackman "Searching questions about regulators are being asked" The boundary between govern- ment policymakers and the utilities regulators has become an increasingly fraught one. Ministers have voiced frustra- tion that regulators have not acted swi£ly enough to tackle perceived abuses in the energy and water markets. Ofgem in particular has pushed back over the default tariff price cap, argu- ing it lacked statutory powers to crack down hard on the energy retailers – it was accordingly given extra bill-capping powers. public confidence in the regula- tory system. The review is due to go to the Treasury by the autumn, in time for its conclusions to feed into chancellor of the exchequer Philip Hammond's next Budget – if he is still in post by then. With Jeremy Corbyn's opposi- tion committed to scrapping independent regulation of the water industry, utilities will be watching nervously to see if the Tories too decide they want to extend Whitehall's remit. However, the call for evi- dence for the review of util- ity regulation contains some searching questions about the regulators' futures. It ques- tions the very role of economic regulation – the philo sophy that has underpinned the regulators' work since the privatisation of the 1980s and 1990s. It asks for views on the boundary between independ- ent regulation and the setting of policy and strategic direction by the government, questions whether regulators' duties and functions need to change. It also asks if there is a lack of clarity on strategic direction, and what the regulators can do to bolster

• Cover