Utility Week

UTILITY WEEK | 31ST JANUARY - 6TH FEBRUARY 2020 | 13 Policy & Regulation This week Network operators 'cannot justify' rises Challenge group says companies cannot justify the extra £4.1 billion they have requested for RIIO2 The challenge group created by Ofgem to scrutinise network operators' business plans has said the companies cannot justify the additional £4.1 billion of non-load-related expenditure they have requested RIIO2 begin- ning in April 2021. The majority of the increase was requested by the electricity transmission networks. National Grid Electric- ity Transmission and Scottish Hydro Electricity Transmis- sion – the transmission arm of Scottish and Southern Electricity Networks – were judged to have the least con- vincing plans of those submitted to Ofgem in December. National Grid Gas Transmission and National Grid Electricity System Operator (ESO) also requested large increases in non-load-related expenditure. "A‹er stripping out expenditure related to the load on their systems, the companies are asking for an addi- tional £4 billion of expenditure compared to RIIO1, rep- resenting around a 20 per cent increase," the challenge group stated in its report. "We don't think an increase of this size has been, or indeed can be, justified." The report said the decarbonisation of the energy sys- tem will require a large boost in spending on the power grid, but this is not a major factor in their plans, "which are still based to a large extent on business as usual". • Gas distribution networks (GDNs) plan to spend almost £10.7 billion over RIIO2, according to the final dra‹s of their business plans. Cadent is proposing a small decrease in its average yearly budget, but the other GDNs have requested increases. TG See lead news story, p4 WATER Greater powers promised for Ofwat Ofwat will be granted powers by the Department for Environ- ment, Food and Rural Affairs (Defra) to modify water com- panies' licences as part of the upcoming Environment Bill. The move, which had been considered previously, was con- firmed by the deputy director of water services at Defra, Sophie Broadfield. Speaking at the Westminster Energy, Environment and Trans- port Forum on England's Water Market, Broadfield said the government "strongly supports" Ofwat having that power. She said the scrutiny the regulator had applied to address the rising cost of capital and action taken to control it was welcomed. Broadfield also said greater regional planning is needed to bolster the country's water infra- structure and improve resilience. The sector is "not in a bad place, but there's always more to do", she said, and warned that the government did not want the industry "to sit on its laurels". Drought resilience is on the agenda for the government and an announcement from Defra is expected to coincide with the upcoming Budget, which will take on board views from the National Infrastructure Strategy. The National Policy State- ment will streamline the plan- ning process for developments that will boost resilience. Broadfield said this will mean anything "nationally significant" can be approved by the secre- tary of state rather than local planning authorities. ENERGY Ofgem plans service incentives for DCC Ofgem is proposing to introduce new customer service perfor- mance incentives for the Data Communications Company (DCC). The proposals were pub- lished as part of a consultation in December. The DCC is responsible for managing the smart meter network, including the transfer of data, and for delivering the central switching service that will be a fundamental part of faster energy switching. The DCC's performance is measured against a set of metrics referred to as the opera- tional performance regime (OPR) that are used to determine its revenues. Ofgem is "concerned" that the current OPR may not reflect customer experiences. The DCC said it welcomed the move to initiate a review of the regime and said feedback from across industry indicated the existing metrics "may not be providing the most effective incentives to DCC" and by exten- sion "does not represent the best interests of our customers". Electricity transmission networks want the most Political Agenda David Blackman "Select committees may be less potent in this Parliament" Seven weeks a‹er the election, the Commons is getting back to normal service, albeit slowly. This week has seen the elec- tion for the chairs of the Com- mons select committees, which scrutinise the work of the vari- ous government departments. Leeds West MP Rachel Reeves, who has won kudos as a stern inquisitor when ministers have appeared, is back unopposed at the helm of the business, energy and industrial strategy (BEIS) committee. Ditto Jeremy Corbyn, is widely tipped to return if Sir Keir Starmer wins the Labour leadership contest. The select committees may be less potent than during the past decade of small or non-existent Conservative majorities, when they had more influence over the shaping of government policy. However, a time when a government with a big majority is facing few challenges in Parliament is just the time when effective select committee scrutiny can prove its worth. Neil Parish at the environment, food and rural affairs committee. But how long the chairs remain in post is open to ques- tion. The expectation in West- minster is that Boris Johnson will conduct a wide-ranging revamp of Whitehall that could see BEIS absorb the Department for Inter- national Trade, while splitting out energy and climate change into its own ministry again. Or the climate change brief could be folded into Defra, which already handles efforts to miti- gate the consequences of global warming, such as flood defences. Meanwhile Reeves, who quit Labour's front bench because she didn't want to serve under

• Cover