Utility Week

12 | 14TH - 20TH FEBRUARY 2020 | UTILITY WEEK Policy & Regulation This week Energy firms laud Ofgem net zero plan Flexible electricity suppliers write open letter in support of regulator's nine-point action plan A group of more than 20 energy companies and trade associations have written a letter to the new chief execu- tive of Ofgem to welcome the regulator's recent publication of a nine-point action plan for helping the UK meet its net zero emissions target. The signatories are all mem- bers of the Flexibility First Forum created by Ovo and include its smart energy subsidiary Kaluza as well as Centrica, Octopus Energy and Flexitricity. Ofgem's action plan features commitments to ensure energy markets adequately award flexibility, amend regulatory requirements to support innovation and experimentation, and form a net zero advisory group. "We welcome the steps Ofgem has taken in the publication of its decarbonisation action plan," the letter said. "For a cost-efficient decarbonised system, consumers should be directly incentivised for intel- ligent and efficient energy and network use. This can only be achieved if customers are rewarded for shiˆing demand away from peak times and providing flexibility to the networks to help manage system stability and constraints." The net zero action plan was released on the same day that Jonathan Brearley replaced Dermot Nolan as the chief executive of Ofgem. He had previously served as its executive director for systems and networks. Although not one of the nine main actions, the plan also includes a commitment to address concerns over the "greenwashing" of energy tariffs by some suppliers. TG ELECTRICITY BEIS proposes streetworks powers for heat networks The government has unveiled legislative proposals to extend streetworks powers to heat network developers. The proposal to legislate for extended statutory rights and undertakings was outlined in a consultation document by the Department for Business, Energy and Industrial Strategy (BEIS). The powers, which are part of a wider package aimed at encouraging heat network devel- opment, are designed to remove "costs and uncertainty". Heat networks are not cur- rently classified as statutory undertakers and therefore lack the range of powers available to traditional utilities. These include rights to carry out cer- tain development and highways works, such as laying pipes under roads and being able to access them to carry out mainte- nance and repairs. The lack of such powers means heat networks have to apply for a licence, which tends to be limited in scope and can drive up the price of the work. According to the consulta- tion, the absence of statutory undertaker rights has inhibited the growth of heat networks. It also makes it more difficult for heat networks to maintain and repair their assets. However, the consultation proposes stopping short of a full licensing regime, which it said would create an "unduly burdensome approach" on the heat network market. ENERGY Ofgem rethinks mutualisation curbs Ofgem's plans to require suppli- ers to protect a minimum of 50 per cent of customer credit bal- ances have been pushed back. The idea was mooted in a consultation last October as part of plans to minimise the costs that need to be mutualised across the industry when a supplier fails. Other proposals included in the regulator's ongoing sup- plier licensing review, such as milestone assessments, fit and proper tests, and independ- ent audits, will be progressing to statutory consultation this spring as planned. But following feedback from the consultation, the regulator has decided to phase in its wider mutualisation protection plans. The first phase of the mutual- isation reforms will seek to intro- duce a "high-level principle" to drive suppliers towards taking action that mitigates the extent of costs to be mutualised in the event of failure. This will be delivered alongside its wider reforms in its spring 2020 statutory consultation. Brearley: has replaced Dermot Nolan as CEO Political Agenda David Blackman By the time this Utility Week has landed on doormats, the results of Boris Johnson's long-awaited Cabinet reshuffle will be known. Plans by the prime minister's chief adviser Dominic Cummings for a wide-ranging reorganisa- tion of Whitehall looked set to have been pushed into the long grass, at least until this autumn's comprehensive spending review. Part of that blueprint involved effectively reviving the Department of Energy and Climate Change. However setting because the key next steps on cutting emissions will involve action in areas outside the remit of the BEIS department, such as transport and housing. Setting up a Cabinet commit- tee, which the government has already done, to co-ordinate this action is important, but bodies on the ground will be needed too. Fashionable opinion tends to turn up its nose at Cummings' at times bizarre notions. But in this instance, giving DARPA a green makeover could be worth a shot. up a dedicated ministry for net zero may not be the only way to skin the climate change cat. Cummings is an enthusiast for the US government's Defense Advanced Research Projects Agency (DARPA), which among its other achievements can lay claim to inventing an early version of the internet. There is strong agreement that achieving net zero requires the same kind of concerted cut- ting edge, technological effort. A UK version of DARPA would be able to act in areas that cross departmental bounda- ries without running the risk of treading on ministerial toes. This could be important "A dedicated ministry for net zero may not be the only way"

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