Utility Week

RIIO2 price control proposals will have a nega ve impact on the type of projects that network companies take on. Randolph Brazier, head of innova on and development at the Energy Networks Associa on (ENA), believes companies will be less incen vised to undertake riskier projects, and will be more focused on "vanilla" projects where a return is guaranteed. "That means overall they will be less inclined to innovate. That is a par cular concern given the specific changes to the way innova on will be funded," explains Brazier. "All the focus will be on incen ve-based innova on…The exis ng successful NIA/NIC [Network Innova on Allowance/Network Innova on Compe on] funding models will be scrapped or heavily restricted. This would seriously impede progress towards a smart, flexible, low-carbon energy system and all the progress that network companies have made in recent years." According to Brazier, the regulator should retain NIA/NIC- like funding mechanisms, as well as improved incen ve-based innova on design. "We also believe the regulator should be incen vising low TRL [technology readiness level] projects, longer- term projects, projects which deliver benefits that are beyond the scope of the networks, and cross-vector projects, including where these are not well supported by exis ng arrangements," he says. It is a worrying prospect that a lack of regulatory reform in key areas could block u li es from being able to meet customer demands and achieving long- term decarbonisa on goals. "[Regulatory reform] is absolutely cri cal if we want to make this transi on in a mely and cost-effec ve manner," says Brazier. "Every part of the energy system has a role to play, and the network research and innova on is par cularly important given the central role our energy infrastructure needs to play in decarbonisa on." WATER PRESSURE Water companies play a similarly pivotal role in improving environmental outcomes across their sector. For the Environment Agency (EA), which works closely with Ofwat in a bid to get the best outcomes for water customers, expecta ons for water companies are high as the sector works towards the 2019 price review (PR19). "Water companies will need to make big improvements if they are to achieve the commitments set out in their business plans," says Anne Dacey, the EA's deputy director. "The Environment Agency expects to see a significant reduc on in pollu on incidents, investment to increase resilience to drought and flooding, and a commitment to enhance the environment." The organisa on's role as a regulator sees it provide advice to water companies on their environmental responsibili es and the ac on needed to meet those obliga ons. As part of this drive to challenge the water sector to invest in a more sustainable water network and the long-term future of the environment, the EA and Natural England have outlined some ambi ous targets as part of the Water Industry Na onal Environment Programme (Winep). The programme will contribute to delivering the Regulatory reform is absolutely cri cal if we want to make this transi on in a mely and cost-effec ve manner II C A S E S T U D Y CATCHMENT MANAGEMENT United U li es' (UU's) approach to catchment management has already started to deliver against the "more for less" challenge from all of its regulators, including the Environment Agency, Ofwat and the Drinking Water Inspectorate. As an environmentally sustainable and cost-effec ve approach, catchment management will be more significant in 2020-25 than ever before. UU is working with academic ins tu ons, customers and stakeholders to design and deliver innova ve and sustainable treatment solu ons alongside catchment interven ons to deliver an integrated catchment strategy in 26 catchments across the North West of England. As part of the River Pe eril Catchment project in Cumbria, the company has worked in partnership with key stakeholders to act as the catchment system operator and explored has opportuni es to use alterna ve mechanisms to deliver catchment improvements. The learnings from the Pe eril project have been used to inform UU's strategy and plan through to 2025 and beyond. P R E S E N T S 26 | 29TH MARCH - 4TH APRIL 2019 | UTILITY WEEK

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