Utility Week

UTILITY WEEK | 4TH - 10TH OCTOBER 2019 | 7 feel unable to comment on the merits of the private sector model. "This is about the regulatory system as well as private ownership. So, I do worry about Ofgem and Ofwat saying we don't have an opinion on that. There is a good story to be told about how a regulated system of private investment works." An opportunity for networks Striking a note of optimism from the net- works on climate challenge, he said: "I think it is an enormous opportunity. I can't think of a better thing to be involved in. "If the business that you want to be in is the one that allows diversity to be traded, (which is basically what a network is for), to release the economic value of people doing the same thing but at different times, and helping them share economies of scale, it's a fantastic time and it's just going to get more fantastic as the supply and demand balance has to shi€ and become more diverse. "Climate change is a major challenge, but the opportunity to be part of its solution is a brilliant story for networks." Social inclusion expert Kerry Scott of Mott MacDonald urged energy and water compa- nies to rebuild trust by adopting a "people lens", delivering outcomes that are more inclusive and more accessible, regardless of demographic or opportunity. "We are seeing a convergence of impor- tant types of change: climate, legislative, political. Each of these things have put peo- ple right at the heart of the debate. "My challenge to industry would be how we can look at this collectively, why there is a question of low public trust, what we can do together to move forward. If industry is to make real strides on climate change, it has to be in partnership with its customers." Michael Lewis, chief executive of Eon UK, described the significance of trust as "really, really important" to both the operation of the industry and ultimately climate change. And he warned that when you lose trust, "you end up with an energy supply market like the one we've got – which is on fire. "While much attention so far has been focused on the challenge upstream, such as offshore wind, the problem now is down at the supply end, with customers. "The challenge downstream is actually much more difficult than decarbonising gen- eration. How do you decarbonise transport, and the gas used in heating? We know the various technical solutions. The challenge is how we make it happen. How do we finance it? How do we provide incentives for custom- ers to make their homes energy efficient? "It should be a national infrastructure priority – but we have to figure out how we incentivise local authorities, private landlords, owner occupiers to make that investment." "Every required envi- ronmental scheme in this current review is going through. We might challenge costs but we're not challenging the environment." Jonson Cox, Ofwat "Because we know [about climate change], we are responsible. You can't live in ignorance. Your industries are so important in helping customers understand." Lord Deben, CCC "Candidly, I think there's been an overreaction around the issue of returns which hasn't been helpful. It doesn't mean returns can never change – but it's important to have well- calibrated incentives. When we have had that, it's delivered in spades for customers since privatisation." Phil Jones, Northern Powergrid "My big fear is we run out of the ability to cope [with the energy challenge]. If we don't start to put the policy measures in place today, we will run out of time." Michael Lewis, Eon UK Redressing the balance: Kerry Scott, Mott MacDonald "The New Deal for Utilities Debate brought into focus a fun- damental need: for both parties involved in striking the deal – companies and their customers – to benefit from it. "Of course, privately-owned utilities must earn a profit. And they undoubtedly do run complex systems with diverse stakeholders. "But there is a privilege and responsibility that comes with supplying essential services to the UK population. Utility services are not in the true sense 'public goods' but they are treated as such. The behaviours of companies that provide them need to accord with that idea, and customers expect this. At the same time, customers need help to understand that the companies' purpose encompasses more than, purely, the provision of service. To be sustainable, they must provide a fair return on investment to shareholders, for a start." Read this Expert View in full online at: www.utilityweek.com

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