Utility Week

LEEP UTILITIES IN FOCUS Mul -u lity operator Leep U li es is a joint- venture between Ancala Partners, a mid-market infrastructure investment manager, and the Peel Group, a private property investment and infrastructure fi rm. Leep says it can off er a fl exible and commercially advantageous alterna ve to distribu on network operators (DNOs) in the adop on of electricity networks on new and exis ng developments. Under its regulatory licence, the company can adopt electricity networks built by Na onal Electricity Registra on Scheme-accredited independent connec on providers (ICPs) in return for a fi nancial contribu on. This cannot be off ered by an incumbent DNO. Leep's por olio includes MediaCityUK, the technology and media hub home to the BBC and ITV in Manchester; Princes Dock, a vibrant neighbourhood and integral part of the Liverpool Waterfront; and Canary Wharf Group's Wood Wharf district, a new mixed use waterside commu- nity comprising more than 3,300 homes and alongside shops, restaurants and community facili es. NEW APPOINTMENTS AND VARIATIONS SCHEME Ofwat's New Appointments and Varia ons (NAVs) scheme allows limited companies to provide water and/ or sewerage services to customers in an area which was previously provided by the incumbent monopoly provider. A new appointment is made when a limited company is appointed by the regulator to provide water and/or sewerage services for a specifi c geographic area. A varia on is where an exis ng appointed company, described as an "appointee", asks Ofwat to vary its appointment so it can extend the areas it provides services to. A new appointee has the same du es and responsibili es as the previous statutory water company. A Nav, therefore, involves one company replacing another as the appointee for a specifi c geographic area. Ofwat introduced the scheme to promote compe on across the water industry, while encouraging effi ciency, innova on and lower costs. I N A S S O C I A T I O N W I T H UTILITY WEEK | 12TH - 18TH APRIL 2019 | 25 Both energy and water companies are grappling with environmental, security and aff ordability requirements at a me when the poli cal landscape is uncertain and the long-term impact on business is unclear. In the energy sector, the UK's controversial nuclear power strategy is fraught with obstacles. Following a series of blows to the government's commitment to a new genera on of reactors, Hinkley Point C remains the only project under construc on. Unsurprisingly, this has raised concerns about how the UK's long-term baseload will be provided. For the water sector, the future is no less challenging. Just last month (March), the Environment Agency's chief execu ve, Sir James Bevan, delivered a rallying speech at the annual Waterwise conference in which he warned chronic water shortages could plunge England into the "jaws of death". Adding to the complexity of industry trends impac ng u li es, organisa onal stability is a signifi cant challenge faced by both energy and water companies. "In the energy market, conven onal business models are increasingly being challenged by agile businesses adept at naviga ng the new energy landscape," says Ted Hopcro , energy and u li es expert, PA Consul ng. "For water companies, the background threat of rena onalisa on, aligned with what looks to be a tough price control, is causing companies to review their business fundamentals." According to Hopcro , both water and energy companies are seeing regulators tackling the cost of capital with a renewed vigour. There is a clear determina on not to repeat the post- fi nancial crash scenario where perpetual low interest rates provided great opportuni es for asset businesses. U li es are facing immense cost pressures at a me when customers are also expec ng an increasingly personalised service. Toby Siddall, managing director and UKI u li es lead at Accenture, says energy suppliers in par cular are tackling a complicated environment. Suppliers must respond to the price cap while also mee ng obliga ons from the smart meter rollout, and commitments to faster switching in a marketplace awash with new entrants. "While compe on is intense, the marketplace is simultaneously addressing supplier failures and safeguarding the interests of customers impacted," says Siddall. "It is a complicated environment in which to transform your service and customer rela onship, as well as equip your business for a future that benefi ts both customers and shareholders. But this is what needs to happen – and fast." The three Ds For energy supplier Centrica, there are three major trends transforming the way the company does business and the way it

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