Utility Week

UTILITY WEEK | 10TH - 16TH MAY 2019 | 15 This week Innogy performance 'impacted' by Npower Difficult market conditions for UK retail business Npower cannot be ignored, warns Innogy's CEO The continued difficult market conditions for Innogy's UK retail business, Npower, are a reality the company does not want to "ignore", according to its chief executive. Speaking at Innogy's annual general meeting in Essen, Ger- many, on 30 April, Uwe Tigges said that operationally Innogy is "on track" and the business is progressing as planned. "The only exception, which unfortunately cast a major shadow over fiscal 2018, is our UK retail busi- ness," he said. Npower was given the green light to merge with SSE's retail arm, SSE Energy Services, but the two companies called off the deal late last year due to "adverse develop- ments" in the retail market and "regulatory interven- tions" such as the price cap. Tigges said Innogy had a "good plan" for Npower, which "came close" to being achieved. "We wanted to merge our UK retail subsidiary Npower with the household energy and energy services business of SSE. This undertaking failed, however, due to a further worsening of the market environment," he said. The "drastically worsened outlook" for the new combined company would have made "substantial extra financing" necessary. And follow-up negotiations with SSE "came to nothing", Tigges added. The failed transaction meant Innogy had to "reincor- porate" Npower into its accounts, which "impacted" the company. KP ENERGY £5.1m compensation goes unclaimed Citizens Advice has called for customers to be automati- cally compensated whenever network companies breach their performance standards. In a report, the charity says £5.1 mil- lion customers were entitled to receive went unclaimed over the past three years. Network operators have to meet 39 standards set by regula- tor Ofgem, including how they respond to emergencies, their complaints procedures and the time it takes to reconnect cus- tomers following bad weather. According to Citizens Advice, "very few" domestic custom- ers claim compensation when operators fail to meet these standards. It says the compul- sory compensation scheme, which already covers some of the standards, should therefore be adopted across the board. ENERGY VAT rise could delay decarbonisation Proposed increases in VAT rates on low-carbon technologies risk setting back the decarboni- sation of UK homes and busi- nesses by a "number of years", according to the Renewable Energy Association. The organisation is contest- ing a proposal by HMRC to raise VAT on "energy-saving materi- als", including domestic solar panels, biomass boilers and battery storage, from 5 per cent to 20 per cent. It will maintain the lower rate for installations in residential accommodation for those aged 60 or over or receiving certain benefits, and for installations where the cost of materials is not more than 60 per cent of the total cost. HMRC says the adjustments "retain as much of the relief as possible, while ensuring compli- ance with EU law". ENERGY Suppliers forced to offer export tariff The government has proposed a series of changes to supply licence conditions, introducing a smart export guarantee (SEG) for small-scale renewable genera- tors. The measure will force sup- pliers to pay eligible generators for surplus electricity they pro- vide to the grid and is intended to replace the export element of the feed-in tariff scheme, which has closed to new applicants. In a consultation published in January, the Department for Business, Energy and Industrial Strategy explained that SEG would require all suppliers to offer at least one export tariff. Suppliers would be le£ to decide tariff rates, although they must be "greater than zero" whenever wholesale prices are positive. Tigges: Innogy is "on track" operationally Finance & Investment Stock watch 2,060 2,040 2,020 2,000 1,980 1,960 PENNON GROUP SHARE PRICE, FIVE DAYS 1 May 3 May 7 May SEVERN TRENT SHARE PRICE, FIVE DAYS Reports over the weekend that a Labour government would pay shareholders £20 billion in government bonds as part of the proposed renationalisation of the water sector le a dent in the share prices of the three listed water companies – Pennon Group, Severn Trent and United Utilities – on Monday. All three dropped by about 2 per cent in early trading, before promptly rebounding. 760 750 740 730 720 1 May 2 May 3 May 7 May pence pence 2 May

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