Utility Week

UTILITY WEEK | JULY 2021 | 7 The Month in Review Pennon acquires Bristol Water Pennon Group has acquired Bristol Water for £425 million, adding 1.2 million cus- tomers to the group. The owner of South West Water announced the deal, which gives Bristol an enterprise value of £814 million, in an update to the City on 3 June. At the same time, it revealed a £1.5 bil- lion special dividend and said it would buy back £400 million of shares. The funds for the acquisition and divi- dend are the result of the sale of Pennon's waste management business Viridor for £4.2 billion last year. Water-only company Bristol was 80 per cent owned by Icon Infrastructure, with a 20 per cent stake held by Itochu. The acquisition price equates to a 44 per cent premium on Bristol's regula- tory capital value (RCV). Pennon said it expected the deal to add c.16 per cent to its own RCV. Susan Davy, Pennon group chief executive said: "The acquisition of Bris- tol Water brings great people and a great business to Pennon and I am hugely excited about building a future together. We see attractive opportunities to con- tinue to invest in the Bristol Water busi- ness to deliver enhanced resilience and water security to benefit customers in Bristol and beyond. "We have demonstrated our creden- tials as a responsible business, reducing debt levels, increasing pension contribu- tions, and further supporting the Green Recovery for the much-needed regenera- tion of our region." See analysis on p.14 CMA orders National Grid to hold off from taking control of WPD The Competition and Markets Authority (CMA) has ordered National Grid to hold off from taking control of Western Power Distribution while it considers whether to launch an in-depth investigation into its planned acquisition of the company. National Grid agreed in March to buy the electricity distribution network for £7.8 billion, while selling the Rhode Island- based Narragansett Electric Company to WPD's US owner PPL Corporation for $3.8 billion (£2.7 billion). The firm said it would also sell a majority in its gas transmis- sion business as part of a "strategic pivot" towards the power sector. The CMA said it wished to ensure no action was taken that would prejudice its decision on whether to launch a phase 2 investigation into the merger. As such, the CMA said National Grid should not take ownership or control of WPD, integrate it into the group or do anything that might impair their ability to operate independently of each other. It said both companies must maintain separate operations and brand identities, and that neither should dispose of any assets, make changes to key staff or organi- sational structures, or share commercially sensitive information between them, out- side the ordinary course of business. The CMA said the pre-emptive order does not prohibit the completion of the transaction, provided the companies abide by the restrictions. National Grid said in March that the acquisition of WPD was not conditional on approval from the CMA. The company expects to complete the transaction in July and receive regulatory clearance in September. Speaking to Utility Week recently, chief financial officer Andy Agg said National Grid would take a "light touch" approach to the integration of WPD, keeping it as a distinct unit within the wider group, but he said there were opportunities for cost effi- ciencies "further down the track". Person in the news: Utility Week caught up with newly appointed Good Energy chief executive Nigel Pocklington last month. He talked about his zeal for engaging customers in the energy transition but also had strong words to say about some of his competitors. In particular, he took aim at Bulb, saying: "Bulb is an interesting company because it has garnered a lot of praise and publicity for the way in which it has scaled the business, the would-be consumer friendly stance it has taken and the renewable sourcing it claims to have – and I think the reality doesn't bear that out." The former chief commercial officer of Moneysupermarket Group, who replaced founder Juliet Davenport as chief executive in May, said of the challenges presented by a new industry: "It's a fasci- nating market because at the base element you have got something that is a utility, that's the name of the category and that's how consumers by and large think about it – it's a boring, background thing. The challenge that is fascinating is can you productise something that in its nature people think is just a boring background service?" To read a full interview with Nigel, go to https://utilityweek.co.uk/embracing-the-challenges-of- energy-retail/ 15% Of customers knew water companies provided financial support throughout the pandemic, according to research by Ofwat 69% Overall satisfaction with customer service from energy retailers in the first quarter of 2021, according to Ofgem's latest consumer perception survey. This is the lowest point ever recorded on the tracker and was down from 73 per cent in the previous quarter.

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