Utility Week

6 | JANUARY 2021 | UTILITY WEEK The Month in Review White paper and RIIO2 fi nal determinations spearhead fl urry of energy announcements D ecember saw a urry of land- mark announcements for the energy sector, setting the path for decarbonisation e orts over the coming decade. In its nal determinations on the RIIO2 price control for gas and transmission networks, Ofgem made adjustments to the cost of capital and returned £4.1 billion of allowances disallowed at the dra- determina- tion€stage. We delve into the details of the nal determination on pages 18 and 19 and discuss its implications overleaf. It was an even busier period on the policy front, with Boris Johnson's 10-point plan for decarbonisation followed swi- ly by the National Infra- structure Strategy (NIS), a new and more ambitious greenhouse gas reduc- tion target and nally, as Utility Week was about to go to press, the Energy White Paper. We focus in depth on this push for a "green industrial revolution" on pages 14 to 17. The Energy White Paper was framed by the prime minister's 10-point plan, with much of the sought a- er detail to be decided through a series of consultations throughout 2021. However, the paper did include a commitment to establish a UK emis- sions trading scheme (ETS) to replace the current EU version at the end of the Brexit transition period from New Year's Day. The government said the UK's ETS would have more demanding green- house gas reduction targets than those "There was not the understanding that this was an Olympic-style event … we were treating it like amateur hour." Clare O'Neill, the former COP26 president, lays bare her concerns about the preparations. "The fi nancial viability of the industry is, Ibelieve, in question." Doug Stewart, Green Energy UK founder, shares his concern about the energy retail sector going into 2021. Impact Analysis,p8 Green Industrial Revolution,p14 RIIO2 • nal determinations,p18 Eon boss laments £300m 'black hole' left by failed suppliers Eon UK chief executive Michael Lewis has called for the sector to stamp out the drivers of poor behaviour a er recent supplier failures le behind a £300 mil- lion "black hole of debt". Lewis was speaking in response to the news that more than £33 million is to be mutualised a er suppliers failed to pay their Renewables Obliga- tion (RO). It is the third year in a row that missed payments have been mutualised. Ofgem revealed in December that a total of ten energy suppliers owe more than £17.8 million in RO payments but that it will not be able to pursue them because they have either ceased trading or gone into administration. From analysing Citizens Advice's 2019 report, Picking Up the Pieces, as well as Ofgem's latest " gures on late payment distributions, Eon calculates that failed suppliers have le behind £300 million in various debts. Lewis said: "In the last three years, more than 30 suppliers have le this market, leaving behind a £300 million black hole of debt, outstanding customer balances and unpaid renewable energy commitments – with the costs having to be picked up by well-run suppliers and their customers. "Responsibility for that obvi- ously lies with those suppliers that failed to meet those obliga- tions, but a er three years and many lost millions you have to question why the changes made to industry rules have failed to put a stop to this issue. "The drivers of poor behaviour in this market must be stamped out; the current system allows and even encour- ages abuse by allowing some suppliers to use funds for other purposes – such as setting unsustainably low tari™ s – only to crash out of the market when the bill comes due."

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