Utility Week

The Month in Review UTILITY WEEK | MARCH 2023 | 7 New categories added for 2023 Water Industry Awards This year's Water Industry Awards include a new category celebrating energy management achievements as well as a dedicated leakage award. Joining the Energy in Water and Leakage awards as new entrants for 2023 is the Engineer Consultancy category, as well as the return of Water Retailer of the Year In total, there are 21 categories to enter, including the flagship Water Company of the Year. The winners will be unveiled on Wednesday, 29 June at The Vox, Birmingham, where the whole industry will meet to celebrate the out- standing work of UK water companies and their supply chains. To find out more go to https://waterindus- tryawards.co.uk/ The Month in Review National Grid completes gas arm sale National Grid's gas transmis- sion and metering business has been rebranded a'er the sale of a 60% stake to Macquarie and British Columbia Investment Management Corporation (BCI) completed. The business will now be known as National Gas and will continue under the leadership of Jon Butterworth. He described the completion of the deal as a "truly historic day for the UK's gas industry". National Grid put the gas business up for sale in March 2021 as part of its "strategic pivot" towards electricity with the acquisition of Western Power Distribution. A sale to the consortium led by Macquarie and BCI was announced last March, with a payment of £2.2 billion due to National Grid on completion, and a further £2 billion in debt financing. This valued the busi- ness at £9.6 billion. The agreement includes an option to sell the remaining 40% of the business still held by National Grid to the consortium. Jon Butterworth interview, p28 Ofgem chief executive warns PPM ban could increase energy bills Ofgem chief executive Jonathan Brearley has admitted that unrecoverable debts arising as a result of the ban on forced prepayment meter (PPM) installations could increase bills for paying customers. In a letter to energy retailers on 15 February, Brearley confirmed that the ban on PPM installs by warrant extends to the remote switching of smart meters to prepay mode, and that it would last until 31 March. All suppliers recently agreed to halt their PPM warrant activity following the explosive allegations made against British Gas as a result of an undercover investigation by The Times. However, Brearley said that following internal reviews into their PPM processes, some retailers have expressed concerns about the levels of customer debt caused by the ban. He said: "If this debt cannot be recovered from some customers, then this increases costs for suppliers. "We are aware of the difficult balance here as unrecoverable debts from some customers may then be recovered from the bills of paying customers, many of whom are themselves struggling with paying their bills given the wider affordability issue. "We have an ongoing programme of work to assess costs to suppliers from customer debt. Once we have analysed your responses to our Request for Information on debt, we will be able to determine what action we need to take and, if an adjustment is required, we will act quickly." Brearley further confirmed that the regulator will complete "an intensive consultation process" over the coming months which will consider how the rules and guidance on the use of PPMs apply in the current "exceptional circumstances", as well as whether these should be amended going forward. See further coverage from p8 Switching to surge in second half of 2023 Analysts are predicting a boom in customers switching energy supplier from this summer, driven by the relaxation of gov- ernment support and falling wholesale power prices. However, this has sparked fears that Ofgem's Market Sta- bilisation Charge will end up acting as a blocker to the most competitive tariffs. The launch of the Energy Price Guarantee (EPG) in Octo- ber eroded what was le' of price competition in the mar- ket, further dampening appe- tite for switching. Over the whole of 2022 switching activity was down 73%. However, analysts at Corn- wall Insight have predicted that with the average household bill under the EPG set to rise to £3,000 from April and decreas- ing wholesale prices lowering supplier costs, there is a good chance suppliers will be able to offer tariffs under the govern- ment's cap. This could begin to happen "within a matter of weeks", they say. Using the average switch- ing rates from the two years up to October 2019 as a baseline, Cornwall Insight estimates that approximately 5.5 million likely switches were avoided. It sees this as an indicative figure of the number of households that may be ready to switch when competition ramps up again. However, it cautions that if the wholesale market volatility experienced in 2022 returns, it could become "uneconomic or impractical" for suppliers to offer the kind of competitive tariffs in question. Analysts warned that if switching does begin to increase again it could call into question the effectiveness of Ofgem's Market Stabilisation Charge. This sees suppliers tak- ing on new customers required to pay a fee to the losing com- pany if wholesale prices fall sig- nificantly below the price cap level. This could limit the price drops suppliers can offer, they speculated. The research was welcomed by Uswitch, whose director of regulation, Richard Neudegg, said: "With wholesale prices stabilising, though still high compared to past years, there is an opportunity for suppliers. "Bill payers need the option to fix their deals again or switch away from their current supplier if they want to, just as with the mortgage market where customers have both variable and fixed rate options over different time periods."

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