Utility Week

UTILITY WEEK | DECEMBER 2022 | 13 Pan-utility Scarsella: Blackouts 'very unlikely' this winter The boss of UK Power Networks (UKPN) dismissed the possibility of blackouts this winter as "very, very unlikely" despite concerns over the security of supply amidst the ongoing energy crisis. Speaking during a panel discussion on the second day of the conference, chief executive Basil Scarsella was asked for his thoughts on the risk of power cuts. In his response, he said: "In my view that is possible but it is very, very unlikely. Of course, it depends on a number of factors and these days electricity is generated from gas, coal, wind, sun… Obviously the sun doesn't always shine, the wind doesn't always blow. Gas tra- ditionally has been a reliable supply but we have seen what is happening in Ukraine and Russia and therefore there is a question mark on the supply of gas. "Like I say, very, very unlikely that we will see rota- tional disconnections." His thoughts were echoed by Eon Energy chief execu- tive Michael Lewis, who said that while blackouts are possible, there are a number of factors that would have to align. He said: "The key determinant is if we have an extremely cold period coupled with low wind, coupled with problems with nuclear generators in France for instance. It would require a number of events to come together. The system operator is well on top of all of this. So it is possible, yes, but not likely." Lewis said it is important to consider not just physical security of supply, but also economic security of supply – whether people can actually afford their energy. He explained: "I would say there is another mecha- nism for blackouts and they are individual blackouts. People disconnect themselves. They don't charge their meters. This is prepayment customers predominantly. That is a real risk. "£2,500 bills, that's still a very significant increase on the £1,000 to £1,200 average pre-crisis. Now, of course, there is government support in place at the moment for people on Universal Credit and the £400 for all custom- ers, that will expire next year and we don't know what will come a›er that. "So there is a real challenge around individual cus- tomers, under severe economic pressure, self-discon- necting and I think that is the most serious problem we face at the moment, and a corollary of that is people get- ting into enormous problems with debt." Lewis further warned that if the government does not target support effectively enough from next April when the Energy Price Guarantee comes to an end there could be "real challenges" for both domestic and business customers. Also joining the panel was Noyona Chundur, chief executive of the Consumer Council of Northern Ireland, who agreed that the ability to afford bills is now the core element of security of supply for consumers. She explained how more than 56% of consumers in Northern Ireland are on prepayment meters. She said: "A lot of consumers are on it, because it's useful in terms of budgeting. But now with the cost of living and energy crisis, what that means is… the higher rates of disconnection or self-disconnection and the resulting fuel poverty that can come from that. So afford- ability and security of supply is the number one priority in as far as consumers are concerned." Penrose: Private utility model 'wobblier' than in decades The post-privatisation utility model is "wobblier" than it has been at any time since energy and water companies were taken out of public ownership three decades ago, Conservative MP John Penrose warned. In his opening keynote address at the Forum, Pen- rose said that while the risk of outright renationalisation has "not gone away", the likelihood of it happening has diminished since it was included in Labour's 2019 gen- eral election manifesto. However, Penrose, who led the campaign by back- bench MPs for the introduction of the energy price cap in 2017, expressed concern that the private utilities model looks "wobblier" than in years and risks being "hol- lowed out" by a "re-assertion of state control through regulation and an agenda of ever-increasing levels of regulation". Calls for regulatory intervention "every time some- thing goes wrong", like sewage discharges or problems restoring power following storms, play into this agenda, he said. Ever increasing levels of interference by regulators and politicians would fuel the uncertainty utility compa- nies face, with knock-on consequences in terms of higher borrowing costs for investment, Penrose said. "When we're talking about industries where we're investing for 15 to 25 and sometimes many more years, you can do without someone like me moving the goalposts." The Somerset MP, who also conducted a review of economic regulation for the government earlier this year, said the number of statutory duties in the utilities' strat- egy and policy statements should be slimmed down to no more than four. Equipping regulators with too many duties means they will "do what the hell they like or what the poli- ticians tell them" because they can pick and choose between them. He asserted: "We need to simplify and refocus those statutory duties very, very dramatically." Penrose also raised concerns that the Department for Business, Energy & Industrial Strategy is not taking forward its Review of Electricity Market Arrangements, which it has recently concluded consulting on, with suf- ficient urgency a›er being told in a written parliamen- tary answer that the exercise would not be completed until 2025. "We can't afford to wait," he remarked. "We should be publishing the thing now and then we should be put- ting the results into the Energy Bill tomorrow in order to make these changes. "This is perfectly rescuable but we need to do some- thing about it and fast because the way we are going at the moment, we are dri›ing on to ever thinner ice. It can continued overleaf

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