Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/1298293
8 | NOVEMBER 2020 | UTILITY WEEK The top stories… Water Electricity Energy What has happened? The Competition and Markets Authority (CMA) last month published its initial find- ings on the four appeals to Ofwat's final determinations on the PR19 price controls. Despite agreeing with the regulator in most areas, the CMA took a drastically different approach to the crucial weighted average cost of capital (Wacc). The CMA set its rate of return at 3.5 per cent, compared with the 2.96 per cent signalled by Ofwat and already accepted by the other 13 water companies. What they said David Black senior director, Ofwat: "Our What has happened? Energy retailers are widely expected to face increasing hardship this winter as a likely rise in unemployment impacts on consum- ers' ability to pay. The cushion that was pro- vided by falling oil prices is also likely to prove a harder landing as the year progresses. The first notable casualty of 2020 emerged at the start of the month with Tonik Energy exiting the market- ing, leaving 130,000 customers. Its collapse was announced just What has happened? The prime minster laid out what he referred to as the first steps in a ten-point "green industrial revolution" to be fully unveiled later this month. They included a reiteration of the commitment to roll out 40GW of offshore wind capacity by 2030. Boris Johnson also announced that the government is creating a new target to deliver 1GW of floating offshore wind by the same year. And he unveiled £160 million for upgrading ports and infrastructure to help increase the UK's offshore wind capacity, which Number 10 claimed would create 2,000 construction jobs rapidly and enable the offshore wind sector to support up to 60,000 jobs by 2030. What they said Emma Pinchbeck, chief executive, Energy UK, said: "The package of support for off- shore and floating wind takes a UK decar- bonisation success story and winds it up to a scale fit for the green recovery, creating jobs and billions of pounds of investment." Scottish Power chief executive Keith Anderson said: "These bold ambitions and clear targets are exactly the right signals at exactly the right time." What this means It is the symbolic importance of the speech rather than the substance which seems to have buoyed industry spirits. There was actually very little new here, but the fact that renewable energy was one of the pil- lars of a prime minister's speech at his party conference is hugely encouraging. Whitehall has been given a clear message that Johnson wants to present the UK as a leader in renewable energy, so a roadmap is needed soon. One of the fresh announcements along- side the speech was the doubling of capacity for the next contracts for difference auction, CMA stance on Wacc shocks water sector Boris promises UK will be the 'Saudi Arabia of wind' Casualties start to emerge in energy retail crunch Crunch question: what is a fair rate of return for investing in key infrastructure? "I would approach my strategy on the basis that the price cap isn't going to be removed until 2023." DERMOT NOLAN, FORMER OFGEM CHIEF EXECUTIVE Increasing numbers of consumers are expected to default on bills