Utility Week

12 | 17TH - 23RD JANUARY 2020 | UTILITY WEEK Policy & Regulation This week ESC: mutualisation 'no longer required' Electricity Settlements Company scraps further mutualisation process for the capacity market The Electricity Settlements Company (ESC) has scrapped a potential supplementary mutu- alisation process and con rmed providers will be paid in full this month for the period the capa- city market was suspended. In December, the ESC said almost £11 million would be recovered from across the sup- plier base because of unpaid bills relating to the stand- still. A further mutualisation process for this month had been mooted. However, a combination of recovery from operational suppliers and the fact that some capacity providers exited the market during the standstill has meant a sup- plementary mutualisation will no longer be required. In total, £1.1 billion of charges were deferred during the almost year-long suspension of the capacity market. The non-payment register shows that just over £6…million remains unpaid from the 11 suppliers who ceased trading during the standstill. In addition, six operational suppliers – Enstroga, Euston Energy, Foxglove Energy Supply, Nabuh Energy, PFP Energy Supplies and Utility Point – and Breeze Energy, which entered the supplier of last resort process on 18 Decem- ber, still collectively owe more than £4.8 million. • National Grid Electricity System Operator (ESO) has called for reductions to the procurement targets for all three of the capacity market auctions due to take place in 2020. Most notably, the ESO has recommended the target for the year-ahead (T-1) auction for delivery in 2020/21 be reduced from 300MW to zero. JW ELECTRICITY Call for transparency over balancing A subsidiary of Calon Energy has proposed a modi cation to the Balancing and Settlement Code that seeks to improve transpar- ency over bilateral trades by the National Grid Electricity System Operator (ESO) conducted out- side of the balancing mechanism. Although details of the trades, including volume and cost, are released by the ESO, the counterparties are not identi ed. According to the proposal document, this anonymity grants them the advantage of having access to information not avail- able to the rest of the market. Modi cation P399 would address this issue by including their identify within the balanc- ing services adjustment data used to calculate imbalance prices. A modi cation workgroup is expected to convene this month. GAS Ofgem to fl atten transmission fees Ofgem has given preliminary approval to a modi cation to the Uniform Network Code that would reduce the variation between gas transmission charges in diœ erent parts of the country. Transmission fees are split between capacity charges, which grant users the right to ž ow gas onto and oœ the network but are payable regardless of whether they are exercised, and com- modity charges, which are paid on actual ž ows. Both sets are further divided into entry and exit charges. The modi cation UNC678A would ž atten reference prices across the network, removing any variation between entry and exit points – dubbed the "postage stamp" (PS) model. In its minded-to decision, Ofgem said: "As the gas system is largely operating well below capacity and location is not a signi cant driver of cost, we think that a PS approach to pricing is more appropriate." The regulator is now consult- ing on the proposed changes, which it plans to implement at the beginning of the new gas year in October 2020. The dead- line for responses is 24 February. WATER Stormont deal pledges investment Investment in the water sector has been promised to Northern Ireland Water as part of the deal to restore the devolved Stormont government, which collapsed three years ago. The New Decade, New Approach dra¤ deal includes the promise to transform public ser- vices and invest in the economy. The move has been welcomed by NI Water, which had pleaded for urgent investment. Reversal of fortune: providers will now be paid Political Agenda David Blackman "The Tories are planning fresh resources for the north" Westminster's new MPs have still been nding their feet this week. Among their ranks are the blue army of new, northern Conservative MPs who smashed through the "red wall" of Labour constituencies that before 12…December stretched from north Wales to south Yorkshire. The upshot of the general election earthquake is that the Tories now have a direct stake in what ex-chancellor of the exche- quer George Osborne termed the Northern Powerhouse. And some of the best pros- pects for developing carbon capture and storage (CCS) technology are likely to be found in nearby Teesside. The energy sector must seize the opportunities presented by the government's northward turn of focus. It would be poetic justice if the region that suœ ered grievously from the decline of coal could be the big winner from the rise of the carbon bad boy's cleaner and greener successors. This explains why the Tories are hatching plans to inject fresh resources into the north of Eng- land in the upcoming Budget. This spending boost poten- tially oœ ers new opportunities for the energy sector, which unlike many industries, isn't focused on London and the south east. Rather, the gold mines of the green industrial revolution are to be found on England's North Sea coast. The east coast towns and cities, which were hit hard by the decline of the once thriving shing industry, are the epicen- tre of an explosion of oœ shore wind development that shows little sign of slowing down.

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