Utility Week

18 | 24TH - 30TH MAY 2019 | UTILITY WEEK Finance & Investment This week Nuclear write-offs hit Grid for £137 million US labour dispute and cost-cutting initiatives also take chunk out of company's operating profit National Grid has reported an 18 per cent drop in operating profit to £2.8 billion aer writing off £137 million for developing connections for the now shelved Wylfa Newydd and Moorside nuclear projects. The company said its 2018/19 results were also impacted by one-off expenses of £283 million and £204 million related to a labour dispute in the US and cost-cutting efforts on both sides of the Atlantic. Adjusted operating profit for the electricity transmis- sion business in the UK slipped 2 per cent year on year to £1 billion. Regulated financial performance rose by 8 per cent year on year to £1.4 billion. Return on equity rose by 0.6 percentage points year on year to 13.7 per cent – 3.5 percentage points higher than the company's baseline allowance under RIIO. Regulatory asset value grew by 3.8 per cent year on year to £13.5 billion follow- ing £925 million of investments made during the year. There was a 38 per cent year-on-year drop in adjusted operating profit for the gas transmission business in the UK to £303 million, and regulated financial performance fell 11 per cent year on year to £443 million. National Grid chief executive John Pettigrew said: "During the year we launched new efficiency pro- grammes to become a leaner, more agile organisation. Having delivered almost £640 million of savings for UK customers over the last six years, efficiency remains a key focus, as does continued investment, which will increase to almost £5 billion each year for the next two years." TG ENERGY UK stays eighth in renewables league The UK has retained its posi- tion as the world's eighth most attractive destination for renew- ables investment, according to EY's Renewable Energy Country Attractiveness Index (RECAI). China and the US remain first and second respectively in the biannual index, while France has jumped two places to third aer doubling its onshore wind installation targets. EY said the UK was buoyed by the government's offshore wind sector deal in March but weighed down by falling onshore wind installations following the closure of the renewables obligation to new applicants, as well as the lack of government support for the Swansea Bay tidal lagoon and reforms to networks charging under consideration by Ofgem. ENERGY Labour debt pledge cuts creditor risk The Labour party's proposals to honour the existing debt of network operators in full "sig- nificantly reduces" the risk that nationalisation would result in immediate losses for operat- ing company creditors, ratings agency Moody's has said. While Labour plans to nationalise the energy networks if it gains power could see inves- tors paid less than the market rate for their assets, Moody's said that any nationalisation is "likely to be structured in a way that avoids imposing losses on operating company creditors", although it warns that the credit quality of holding companies could be weakened. ENERGY Eight sites get UKPN flexibility deals UK Power Networks has awarded contracts worth £450,000 to six companies in its second tender for flexibility services. The distribution network operator said the auction, which was hosted on the Piclo Flex platform, was the UK's largest to date, securing 18.2MW of capac- ity across eight locations. Barry Hatton, director of asset management at UK Power Networks, said: "Flexibility offers a wealth of opportuni- ties for the energy resources connected to our network, like wind and solar plants, but also demand-side response to help us create an open, transparent and accountable new market for their services." The contracts vary in length from one to four years and were awarded for the following eight locations: Brandon, Leighton Buzzard, Lewes Newhaven, Lithos, Merton, Mill Hill, Rom- ney Warren, and St Helier. Wylfa Newydd nixing knocks Grid's bottom line Stock watch 860 850 840 830 820 810 NATIONAL GRID SHARE PRICE, FIVE DAY 26 April 8 May 20 May NATIONAL GRID SHARE PRICE, ONE MONTH The publication on 15 May of the Labour party's proposals for the renationalisation of Britain's energy networks if it forms the next government took a chunk out of National Grid's share price last week. The price dropped by more than 4 per cent during the course of Wednesday and Thursday before recovering slightly ahead of the weekend. At the time of writing, National Grid shares were trading at 825p. 860 850 840 830 820 810 16 May 17 May 20 May 21 May pence pence

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