Utility Week

UTILITY WEEK | 21ST - 27TH FEBRUARY 2020 | 5 WATER Ofwat defiant as three more join Yorkshire Water in rejecting PR19 determinations The Ofwat director heading PR19 has told Utility Week that compa- nies appealing to the Competition & Markets Authority (CMA) will face tough questions about their rationale for rejecting a "comfort- able" final determination. By the deadline last week for accepting Ofwat's final decisions, Anglian, Northumberland and Bristol had decided to join York- shire in seeking a CMA referral. Ofwat's David Black said it was not yet clear what had driven the companies to appeal. He noted the significant differ- ence between the regulator's base cost allowance and Anglian's, but for the other companies there would be questions about what drove their decisions. The regulator's final determi- nations were more generous to companies than its draŒ determi- nations and many industry observ- ers did not expect any companies to risk an expensive and complex referral process. However, Yorkshire became the first company to break ranks, declaring that the penalty meas- ures in its determination were "poorly designed". Anglian Anglian had the largest gap between its proposed investment of £6.5 billion and Ofwat's final determination of £5.7 billion. The total expenditure gap of £747.8 million means bills would come down by 10 per cent compared with Anglian's proposed 1 per cent bill reduction. Peter Simpson, chief executive of Anglian, said the company did not believe the final determination allowed the com- pany to fulfil its resilience goals and requested the CMA referral "to consider if the right balance has been struck between bill reduc- tions and investment". Northumbrian At final determination, Northum- brian was leŒ with the biggest cuts to bills of any water company, aŒer Ofwat made no movement from its draŒ determination. The regula- tor's target cut was 25.6 per cent, compared with Northumbrian's proposed 21.3 per cent reduction. The regulator conceded £23.3 million in spending allowance to £2.7 billion – leaving a shortfall of £156.1 million. Bristol Bristol Water rejected Ofwat's final determination on grounds of financeability. It was the only water-only company to do so, hav- ing previously appealed its PR14 determination five years ago. Its final determination included a 14.8 per cent cut in bills, com- pared with the 5.4 per cent reduc- tion proposed by the company. Thames, meanwhile, said that while it "carefully considered" a CMA referral, it ultimately judged that this would be a "significant management distraction" at a key time. As utility companies pick up the pieces from another extreme weather event, Storm Dennis, the government has promised to invest £1.2 billion in the world's most advanced weather and climate forecaster. The supercomputer will be managed by the Met Office and will provide data to predict more accurately where rain will fall, modelling the UK down to 100m squares, from the current 1.5km squares. Utility Week Investor Summit 2020 Book your place now at the only pan-utility conference to bring together key speakers and figures from government, regulation, investment and utilities, who will assess the impact of Brexit, regulation, M&A activity, infrastructure, legitimacy and climate change on future investment. It takes place on 5 March in London. For more details visit https://event.utilityweek.co.uk/investor €16.7bn EDF has reported group-wide Ebitda up 12 per cent for 2019 on revenues of €5.2 billion. Its UK business recorded an operating loss of £294 million. Centrica chairman takes leave of absence Centrica chairman Charles Berry is taking a leave of absence due to an "unanticipated medi- cal condition", the company has confirmed this week. A company spokesperson told Utility Week that Berry is expected to be back within weeks. In the meantime, Scott Wheway, chair of the company's remunera- tion committee, will act as interim chairman. A statement issued by the Brit- ish Gas owner said: "We wish him well and expect him to return to his duties shortly." Berry joined the board as a non- executive director on 31 October 2018 and became chairman of the board and nominations committee on 21 February last year. The energy giant, which serves around seven million households in the UK, is in the process of appoint- ing a new chief executive to replace incumbent Iain Conn when he steps down later this year. EXECUTIVE MOVES Photo: Picfair

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