Utility Week

12 | 24TH - 30TH MAY 2019 | UTILITY WEEK Policy & Regulation This week Centrica gets price cap judicial review High Court allows legal challenge to regulator's calculation of wholesale costs for default price cap The High Court has granted British Gas owner Centrica a judicial review into how Ofgem calculates wholesale costs for its default price cap. The regulator insists it will "robustly defend" its approach to setting the price cap but admit- ted the level may be "adjusted" as a result of the review. Centrica has been granted permission by the High Court to mount a legal chal- lenge, which could take place before the end of this year. An Ofgem spokesperson said: "Ofgem will robustly defend in court our approach to setting the level for the first period of the default price cap and is confident of securing a successful verdict. "Whatever the outcome of the case, the price cap will remain in place for the 11 million households on default deals and will continue to ensure that they pay a fair price for their energy." Centrica has made no secret of its scepticism about the price cap's benefits for customers, and believes that Ofgem did not calculate it fairly. In a trading update ahead of the company's annual general meeting on 13 May, Centrica reported a "chal- lenging trading environment", citing the price cap, warmer weather and falling gas prices as likely to impact its financial performance in the first half of 2019. It also blamed the price cap for the loss of 234,000 British Gas accounts in the first four months of the year. Other energy suppliers have also said the price cap has impacted their performance. AJ WATER Ofwat proposes governance changes Water industry regulator Ofwat is proposing to incorporate new objectives about board leader- ship, transparency and govern- ance into water licences. Ofwat introduced corporate governance principles in 2014 and updated them earlier this year to require each company board to set out the business's purpose, strategy and values. Boards must be satisfied that these, and the corporate culture, reflect the needs of all those the company serves. Ofwat has launched a consul- tation on the proposed changes, which mark the latest step in its bid to strengthen water compa- nies' corporate governance. It will run until 14 June. ENERGY Glasgow to be UK's first 'net zero' city Scottish Power has pledged to turn Glasgow into the UK's first zero-carbon city, with a mass rollout of electric vehicle (EV) charging points. The company's chief execu- tive Keith Anderson outlined the pledge in a speech at this month's All Energy Conference in Glasgow. Scottish Power will work with Glasgow Council on decarbonis- ing heating and transport. One key measure will be installing an EV charging system over the next ten years to serve the 70 per cent of Glasgow's residents who live in flats with no personal off- street parking. Sites are already being assessed for workplace and public charging locations where households can charge rapidly away from home. GAS Build the stepping stones to green heat Gas networks, with the help of government and Ofgem, need to start laying "stepping stones" towards the decarbonisation of heat in the early 2020s, indus- try stakeholders have told the Energy Networks Association. The organisation has released a new report by Accent sum- marising the feedback from a recent stakeholder engagement workshop on the RIIO2 price controls. The participants said gas networks should act with urgency rather than just wait- ing for a policy decision from government. They were urged to locate a middle ground between closing off opportunities because of underinvestment and being le¡ with stranded assets as a result of overinvestment. Stakeholders said that net- work operators need to develop a stronger evidence base on the heat decarbonisation options through trials and demos. Court grants British Gas owner a judicial review Political Agenda David Blackman "Labour would rather talk nationalisation than Brexit" This week's European elections and last week's unveiling by Labour of its energy network renationalisation plans don't seem to have much in common. The EU may have a remit over energy but ownership structures are fundamentally a matter for individual member states. It seems an odd moment, therefore, to make this announcement, which follows the furore over its admission that it will not pay full market value for the water industry. party's core supporters, whether Leavers or Remainers, who are disgruntled that the opposition is not adopting a more robust position on EU withdrawal. However, if this is the gambit, it appears to have had little impact with Labour haemor- rhaging votes, according to the latest opinion polls. And as National Grid share- holders nursing a £1 billion loss on Labour's proposals would tes- tify, using utilities as a political football is a dangerous game. However, viewed from another angle, the timing of Labour's announcement last week is less coincidental. The leadership is desperate to shi¡ the subject of public debate from Brexit, which divides the opposition nearly as much as the Conservatives. Jeremy Corbyn personally seems a lot less interested in the EU withdrawal than most of his pro-Remain party Restoring public ownership is an issue that the bulk of his activists can rally round. Therefore, the Labour high command's decision to turn up the dial on nationalisation can be seen as an attempt to rally the

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