Utility Week

6 | SEPTEMBER 2021 | UTILITY WEEK The Month in Review £1.2bn The sale price achieved for SSE's remaining 33 per cent stake in SGN. £11m The amount Thames Water has been ordered to pay back to 13,800 non-household customers and water retailers after billing errors. "Climate change is here, it's already affecting our communities, the economy and people's lives. Yet the prime minister still can't make his mind up whether he cares about the climate or not. This [the IPCC report] is a wake-up call." Sir Ed Davey, leader of the Liberal Democrats and ex-energy and climate change secretary M acquarie Asset Management has agreed to acquire a majority stake in Southern Water, investing more than £1 billion to help turn the business around. The Australian bank's infrastructure investment arm said the capital injection would enable Southern to upgrade its net- work carry out its £2 billion investment pro- gramme in under performing assets during AMP7 – the equivalent of around £1, 000 per property in the water company's catchment. Macquarie, which will invest on behalf of parties including pension funds and insur- ance companies, said the spending would allow repairs and improvements to assets that have been causing environmental harm. In an open letter to Ofwat, the asset management group said it planned to reduce pollution incidents by more than 50 per cent compared with 2019 in the coming four years and work to further reduce leakage, improve customer service and honour bill reductions set at PR19. Macquarie said none of the equity investment would be returned to the existing shareholders in Southern Water's owner, Greensands Holdings. Leigh Harrison, head of Macquarie Infra- structure and Real Assets, said Southern needed "significant investment". Without Macquarie takes £1bn stake in Southern RO may have to be paid quarterly The government and Ofgem are considering requir- ing suppliers to settle their Renewables Obligation on a quarterly basis in an effort to reduce the amount they are able to default on. Obligations are currently set on an annual basis, with suppliers having five months a"er the end of the period to settle. Suppliers can meet their obligations either by purchas- ing Renewable Obligation Certificates from accredited generators or making cash payments in lieu. Moving to a quarterly set- tlement basis, one of the options being considered in a joint consultation issued by the Department for Busi- ness, Energy and Industrial Strategy and Ofgem, would reduce the maximum period of obligation on which sup- pliers could default from the current 19 months. it, the business would be unable to fulfil the expectations of the millions of customers that rely on its services each day or reduce its negative impact on the local environ- ment, he said. Harrison added that the £1.073 billion investment would put Southern, which was hit by a £90 million fine by the Environment Agency in July a"er unpermitted sewage discharges, back on a stable footing that would enable an "ambitious" multi-year transformation plan to make essential water and wastewater services in the south east of England more sustainable and resilient." Macquarie said Southern's board and committees would retain sufficient inde- pendence to ensure they acted in the best interest of customers and stakeholders. It noted that the recent crown court ruling against Southern, which said long- term investors should be more present and involved in company performance. Macquarie attracted widespread criticism during its decade-long ownership of Thames Water, which ended in 2017 and saw the company's debt balloon. Ruth Williams, water correspondent See analysis, p13 Southern has a £2bn investment programme to executive during AMP7

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