Utility Week

The Month in Review UTILITY WEEK | NOVEMBER 2022 | 7 Ofwat tells Yorkshire to recall £940m loans Yorkshire Water has agreed to recover intercompany loans totalling £940 million, with shareholders also agreeing to invest a further £100 million aimed at reducing spills from storm overflows. On the back of the announcements, Ofwat has closed its enforcement case into the company, which was launched in May and focused on concerns about loans made by Yorkshire to two associated companies within the wider corporate group. While these loans were initially approved by Ofwat in 2008 and 2009, the group had since been restruc- tured, with the loans trans- ferred to different companies. Ofwat's investigation con- sidered this was a breach of licence conditions, because the regulator needed to give consent to the changes. It also expressed concern that there were no contracted repayment dates. Yorkshire has agreed to recover the full £940 million by March 2027, with at least £300 million returned by June 2023. The extra £100 million from shareholders is due by 2025 and will go towards reduc- ing storm overflow spills to an average of 20 per overflow each year. Renewables investment fears over revenue cap initiative A key plank of the govern- ment's Energy Prices Bill has spooked investors in renewable generation and will increase financing costs for future investments, experts told Utility Week during October. As Utility Week went to press, the bill was progress- ing through Parliament. This prompted fevered debate about its proposals for a cap on the revenues of low-carbon genera- tors. The plans were described as "extraordinarily vague" by the former head of strategy at the Department for Business, Energy & Industrial Strategy, Adam Bell. He went on to describe it as a "radical government inter- vention", adding: "For the first time, the government has effec- tively said we are willing in the face of this crisis to confiscate your revenues and we're not going to tell you how or when. We're going to put together a scheme which is basically a cudgel to get you to comply with our preferred route, which is voluntary CfDs." Meanwhile, Richard Nourse, founder of Greencoat Capital, said ministers must be "care- ful not to do something that means that the investors they need to fund the build out of new nuclear and renewables are scared off investing". (To see more reaction go to https:// utilityweek.co.uk/extraordi- narily-vague-revenue-cap-has- spooked-investors/) Climate minister Graham Stuart sought to address these concerns during a Parliamen- tary debate on 17 October, saying: "One of my biggest con- cerns when we were looking at the package was to ensure that there are no disincentives to investment in renewables. "We are talking about prices linked to gas that are completely out with any of the expectations of those who run long-standing nuclear and other low-carbon production. This is an intervention that deals with prices well beyond any prior expectation. It will therefore not disincentivise or undermine any existing busi- ness plans." He added that the govern- ment will bring forward further proposals in due course and will consult with the industry to ensure that its measures do not disincentivise investment. The Month in Review 4TWh Electricity exported by the UK between April and June 2022 – the first time since 2010 the country has been a net exporter. £65 million Extra costs caused by rising energy prices for United Utilities in the first six months of its financial year. £150m Financial penalties Ofwat imposed on 11 water companies for missing performance commitments. 33GW Pipeline of UK floating offshore wind projects, up 43% year on year, according to RenewableUK. Over the past month, there have been a number of high-profile appointments across the utilities sector, including: Scottish Water Alex Plant has been named the new chief executive of the company, following the retirement of Douglas Millican, who announced his intention to step down in January this year. Plant is currently director of strategy and regulation at Anglian Water. He will join Scottish Water in June 2023 aƒer Millican steps down in May. Plant said: "A key challenge will be taking forward the trans- formation work which is already underway. This will ensure that Scotland's water and wastewater services continue to provide value for money and provide confidence for customers as we face some real challenges, especially around climate change." BEIS The Department for Business, Energy & Industrial Secretary (BEIS) has appointed a second permanent secretary the department to join in November. Clive Maxwell, who is currently director general of high speed rail in the transport department, will work alongside Sarah Munby who has been permanent secretary since 2020. Maxwell's role will be to provide leadership across the department's delivery portfolio, ensuring BEIS can deliver programmes ranging from energy support this winter to longer term investments. Ofgem The regulator has appointed Rebecca Barnett as its interim direc- tor of networks, as part of a continu- ing reshuffle of its senior team. Barnett has spent 10 years with the regulator, most recently as deputy director, commercial and assurance. Akshay Kaul, who has held the role since 2020, started a new position last month as interim director of infrastructure and secu- rity of supply. ON THE MOVE

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