Utility Week

It takes in a large patch, straddling the Scottish border regions, Northumberland, Carlisle, and parts of Cumbria. There is eco- nomic capital, for instance, for the south of Scotland in Carlisle, in the same way that North Wales is a key part of the nuclear industry for the North West. "There are lots of examples where the Northern Pow- erhouse doesn't just talk about England, it's about the North as an economic actor," says the NPP's CEO. The collaboration on o‚ shore wind between the Energy Sys- tems Catapult in the North East of England and Scotland is another strong example. "It is about intensifying our links globally, but also to our neighbours, and making those meaningful decisions work." Time for action – and support With utilities already collaborating on regional growth issues, are they being hamstrung by delayed infrastruc- ture decisions on transport, I ask Murison? Do they need to hold back in some areas of their own future business strategy until the connectivity picture becomes clearer? It's a question that brings an emphatic "No". "Abso- lutely not. We would use the rough estimate that, for that one trillion pounds [of the likely economic value of Northern growth, as identiŠ ed by Steer], probably only £1 out of every £10 will be demonstrated and generated by connectivity." Because while connectivity may underpin growth in the North, with large travel-to-work areas needed to expand the economy to become more like London and the South East, transport is far from the whole story. "Transport is an enabler for our economy rather than a direct leading specialism. If you build Northern Power- house Rail, you build HS2, you improve links – such as building mass transit systems like Manchester has done with its Metrolink – that gives you the travel-to-work area. "But that's still only 10 per cent of the value, £100 billion [of potential economic growth]. If you want to get to the trillion, you need to do industrial strategy, including energy, and do it properly." So, what more can utilities do then, to grasp the beneŠ ts of this brave new world of rapid regional growth, particularly with the UK's decarbonisation agenda and net zero coming up the inside track ever faster? "I think we need to be careful not to overload utili- ties with doing the transition," says Murison. "Also, the investment that needs to happen will o› en be happen- ing outside of the asset base that's regulated, outside of Ofgem's inœ uence – although Ofgem needs to use its regulatory functions to empower utilities in the North to enable innovation." He continues: "It [Ofgem] will need to be cognisant of these growth opportunities (such as for CCUS, hydrogen and an awful lot of electriŠ cation), which at the same time will require us to create new utility infrastructure. All of these challenges are going to have massive impli- cations for the utility sector. "And because the North of England is going to lead the way in many of these technologies, it means our util- ities will be using, hopefully, the freedom the regulator will give them… to be an enabler much more readily. "There will be private sector businesses wanting the opportunity to share in the advantages this will create for disruption, and for enabling lower-cost solutions. It's not all about loading costs onto the infrastructure base." Power in numbers While the regional growth narrative is unlikely to harm Northern utilities' case in their price review talks with the regulator, it's not something the NPP would ever get embroiled with. The organisation may represent the business voice of the North of England to government, but it also works to deliver projects and opportunities that don't require its support at all. "We are committed to rebalancing the economy of the country by making the North the success it can be, with- out talking down or doing down the South. But we don't lobby for any one business – that's not our purpose. We lobby on behalf of the North's interests. We listen to businesses – including utilities – to help inform what the North's interests are. And clearly all of the utility sector, because they are regulated businesses, are more than able to tell their own story. They don't need our help." Nonetheless, pro‚ ering an overall view, and one not related to any speciŠ c company, Murison says there does appear to be "a disconnect" between how Ofgem is seek- ing to approach price reviews and the need for the North of England to develop its economy. "We need to be tak- ing long-term decisions, rather than, bluntly, simply try- ing to reduce bills," he adds. "We need to be taking the right decisions for the country and for the North, and that means not making It takes in a large patch, straddling the Scottish border regions, Northumberland, Carlisle, and parts of Cumbria. There is eco- nomic capital, for instance, for the south of Scotland in Carlisle, in the same way that North Wales is a key part of the nuclear industry for the North West. "There are lots of examples where the Northern Pow- erhouse doesn't just talk about England, it's about the North as an economic actor," says the NPP's CEO. The collaboration on o‚ shore wind between the Energy Sys- tems Catapult in the North East of England and Scotland is another strong example. "It is about intensifying our links globally, but also to our neighbours, and making those meaningful decisions work." Time for action – and support With utilities already collaborating on regional growth issues, are they being hamstrung by delayed infrastruc- ture decisions on transport, I ask Murison? Do they need to hold back in some areas of their own future business strategy until the connectivity picture becomes clearer? It's a question that brings an emphatic "No". "Abso- lutely not. We would use the rough estimate that, for that one trillion pounds [of the likely economic value of Northern growth, as identiŠ ed by Steer], probably only £1 out of every £10 will be demonstrated and generated by connectivity." Because while connectivity may underpin growth in the North, with large travel-to-work areas needed to expand the economy to become more like London and the South East, transport is far from the whole story. "Transport is an enabler for our economy rather than a direct leading specialism. If you build Northern Power- house Rail, you build HS2, you improve links – such as building mass transit systems like Manchester has done with its Metrolink – that gives you the travel-to-work area. "But that's still only 10 per cent of the value, £100 billion [of potential economic growth]. If you want to get to the trillion, you need to do industrial strategy, including energy, and do it properly." So, what more can utilities do then, to grasp the beneŠ ts of this brave new world of rapid regional growth, particularly with the UK's decarbonisation agenda and net zero coming up the inside track ever faster? "I think we need to be careful not to overload utili- ties with doing the transition," says Murison. "Also, the investment that needs to happen will o› en be happen- ing outside of the asset base that's regulated, outside of Ofgem's inœ uence – although Ofgem needs to use its regulatory functions to empower utilities in the North to enable innovation." He continues: "It [Ofgem] will need to be cognisant of these growth opportunities (such as for CCUS, hydrogen and an awful lot of electriŠ cation), which at the same time will require us to create new utility infrastructure. All of these challenges are going to have massive impli- cations for the utility sector. "And because the North of England is going to lead the way in many of these technologies, it means our util- ities will be using, hopefully, the freedom the regulator will give them… to be an enabler much more readily. "There will be private sector businesses wanting the opportunity to share in the advantages this will create for disruption, and for enabling lower-cost solutions. It's not all about loading costs onto the infrastructure base." Power in numbers While the regional growth narrative is unlikely to harm Northern utilities' case in their price review talks with the regulator, it's not something the NPP would ever get embroiled with. The organisation may represent the business voice of the North of England to government, but it also works to deliver projects and opportunities that don't require its support at all. "We are committed to rebalancing the economy of the country by making the North the success it can be, with- out talking down or doing down the South. But we don't lobby for any one business – that's not our purpose. We lobby on behalf of the North's interests. We listen to businesses – including utilities – to help inform what the North's interests are. And clearly all of the utility sector, because they are regulated businesses, are more than able to tell their own story. They don't need our help." Nonetheless, pro‚ ering an overall view, and one not related to any speciŠ c company, Murison says there does appear to be "a disconnect" between how Ofgem is seek- ing to approach price reviews and the need for the North of England to develop its economy. "We need to be tak- ing long-term decisions, rather than, bluntly, simply try- ing to reduce bills," he adds. "We need to be taking the right decisions for the country and for the North, and that means not making UTILITY WEEK | 6TH - 13TH FEBRUARY 2020 | 15 continued overleaf Policy & Regulation "We are committed to rebalancing the economy of the country by making the North the success it can be, without talking down or doing down the South."

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