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UW October Digital edition

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Page 7 of 43

8 | OCTOBER 2020 | UTILITY WEEK The top stories… Regulation Customers Networks What has happened Ofgem has issued its dra determinations on gas and transmission networks' business plans for 2021-26 (see p24-25). They have been met with a furious backlash from the compa- nies concerned (see The Month in Review, p6), who said the plans could derail the net- zero journey and render essential resilience work unfinanceable. In parallel, the regulator is consulting on the sector-specific methodology for the next price control in electricity distribution, which will run from 2023 to 2028. This con- firms that Ofgem will carry across the model from gas and transmission that moves some allowances into net zero reopeners through- out the period. It also poses the question as to whether the pathway to net zero should be decided via some form of centralised system or whether networks should focus instead on the most likely route for their own regions. What has happened PPL Corporation, which has owned West- ern Power Distribution (WPD) for 20 years, appointed advisers this summer to find a buyer for the DNO, which serves eight mil- lion customers over four networks. PPL said it was willing to look at all cash or a com- bination of cash and US utility assets. The sale is because it wants to consolidate as a purely US-focused utility holding company, its decision followed a comprehensive stra- tegic review. JP Morgan has been brought onboard as adviser. The business has a regu- latory asset value of £8 billion, although it What has happened Research from Citizens Advice suggests that around 2.8 million customers have fallen behind on at least one energy bill during the pandemic, with the figure at three million for the water sector. Prior to the pandemic, there were 2.4 million households officially identified as fuel poor. However, the govern- ment's own figures suggest there are likely to be at least another 1.6 million not cur- rently covered by the classification who say they cannot comfortably heat their homes. Ofgem moved to ease the pressure on suppliers during the lockdown by allow- ing them to defer some network charges. Water regulator Ofwat similarly introduced rapid code changes governing the non- domestic market to allow breathing space on wholesale charges. However, more pain is certain to come as the end of the furlough schem, which spells fresh financial pain for households and businesses across the country, and the likelihood of unpaid bills increases. ED2 kicks of with debate over local net-zero plans and Bad debt mountain looms as winter approaches WPD sale likely to be a bellweather for the sector "Our networks must be fit for purpose and not create obstacles for the transition to low carbon." BASIL SCARSELLA, CEO, UK POWER NETWORKS

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