Utility Week

10 | 20TH - 26TH MARCH 2020 | UTILITY WEEK Policy & Regulation Analysis Coronavirus consequences As the effects of coronavirus spread across the world, what are the key issues facing UK utilities? Utility Week looks at the impact on the workforce, customers and the retail market, among others. W hile early concerns about corona- virus were greeted with charges of sensationalism against the media, the severity of the situation in Italy has forced many in the UK to consider the worst- case scenario. Across the world – and close to home – real impacts are being felt, on economies, jobs and the way people live their lives. Utilities are, of course, not immune to this and while there is no reason to believe our sector will be affected any more than others will, it is clear there will be consequences. But what will these be, and will they all necessarily be negative? In conversations with industry figures and observers, five key areas have emerged: 1. Workforce The most immediate decision to be made is how staff can be kept safe and how busi- nesses can minimise the spread of infection within their workforce. A deep clean has been carried out at Hin- kley Point C, where workers self-isolated a…er visiting Italy and Tenerife, while a Chi- nese national who worked at the plant tested positive for the virus a…er returning home. Other companies, including Severn Trent, have been asking workers to self-isolate if they have visited infection hotspots, while many have imposed travel restrictions, bol- stered provisions for employees to work from home and set up pandemic working groups. Andy Perry, energy principal at global consultancy Oliver Wyman, told Utility Week most companies would be looking at the same thing – limiting non-essential travel and protecting their workspaces from becoming contaminated. He predicted that, especially if protec- tions are in place for the long term, this could end up having a lasting impact on the way we work: "It's forcing a test of how you can use technology in a way that hasn't been forced before. There were options there before that no one necessarily would have chosen but that do make sense. Why get every one in one place for a meeting if you can do that virtually? "Obviously not every job can be done remotely, but there a significant number that can – and far more than are currently mak- ing use of the technology available. If, for a prolonged amount of time, we have to work around the need to have key people in one room, will we ever go back?" 2. Bill-payers Businesses across the globe have been blind- sided by the coronavirus outbreak (see Seven Days, p4), with inevitable consequences for employment at some point. Given that the issue of vulnerability is already one of the key challenges facing the sector, what more needs to be done to cope if this definition is suddenly and dramatically widened? Mark Abrams, chief executive at Auriga, which advises utilities on how to help vul- nerable customers, said the level of fuel pov- erty in the UK could mean that coronavirus tips many over the edge. He said an impor- tant area for utilities to focus on would be the ability of prepayment meter customers to receive power if they were unable to get out to top up. Abrams said the government and Ofgem would be looking at the feasibility of pay- ment holidays and the provision of emer- gency fuel payments for those most in need. 3. Retailers The delicate balance between success and failure in the energy retail sector is well known. The exit of Tor Water from the non- domestic market last month highlighted the pressures in this sector. Added pressures on staffing could exacerbate existing issues for the challenger brands, while the intense pres- sures being felt by the incumbents will only worsen if there is widespread absenteeism. Perry said: "We have already seen a reg- ular flow of businesses exiting the energy retail market over the past two years and the struggles many of them have in meeting their financial requirements have been widely reported. "Call centres could be badly affected by this and the impact of that could cause significant extra problems. "It's not just at the challenger end. The incumbents are dealing with creaking sys- tems and well-known financial pressures. Mass absenteeism is the last thing they need." There is also a question mark over how the smart meter rollout will be affected, with the inevitable sensitivity of suppliers visiting people in their homes. The revised deadline of 2024 is already viewed with suspicion by many in the retail sector, so could this render it utterly impractical? 4. Renewable generation While overall the dip in travel is likely to pro- vide an unexpected boon to decarbonisation efforts, there may be consequences for the construction of renewable projects if manu- facturing hubs are affected. If the production of solar panels in China is impeded in the long term, what will the consequences be across the UK? Richard Nourse, the founder of Greencoat Capital, told Utility Week: "There is inevita- bly going to be an impact on construction. In solar that's an obvious one, with something like half the solar panels in the world made in China. "For turbines, it's unlikely that the China situation will have a huge impact, but then who knows where else production might be hit?" 5. Gas prices The most direct implication of the global spread of the virus is the effect on gas prices, which have continued to slump. Lakis Athanasiou, utilities analyst at Agency Partners, said: "[Coronavirus] has exacerbated the gas glut. Prices were already on the floor and demand has now been hit in Asia. There is an impact on Europe, particu- larly the UK, because it drives the electricity price. "There are more opportunities for dis- counting in residential supply with low gas and electricity prices and a default price cap based on higher wholesale prices." James Wallin, digital editor, Utility Week

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