Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/178662
Operations & Assets Pipe up Richard Harpley Independent connections firms are flourishing because they focus on the customer. C The tunnels will house 192km of 400kV (10 new) circuits and 32km of 132kV circuits. There will also be two new substations and modifications at five existing substations. Completion is set for 2018. If you have an asset or project you would like to see featured in this slot, please send your pictures and details of the project to: paul.newton@fav-house.com or call 01342 332085 ompetition in gas and electricity connections is producing results that benefit developers and the UK economy as a whole. Over 50 per cent of all new gas connections are made by independent organisations. This reflects the impact of early regulation to encourage new entrants to gas connections and network ownership. By and large, this area has matured and independents thrive. Approaching 10 per cent of new electricity connections are made by independents. Ofgem has long aspired to encourage competition here but only since the 2010 price review have the incentives been sufficient. The introduction of a requirement for distribution network operators (DNOs) to demonstrate they are facilitating competition, coupled with the threat of a Competition Commission referral for failing to do so, is beginning to make inroads. In water, the position is less positive. Self-lay is permitted but due to little regulatory incentive the extent of competition in water connections is patchy. Ofwat's focus is on retail and wholesale rather than connections. As well as the regional network companies, there are currently 11 independent gas transporters (IGTs) and independent DNOs (IDNOs) and, on paper, over 200 Independent Connections Providers (ICPs) in electricity, and Utility Infrastructure Providers (UIPs) in gas. In practice, the number of active, competing ICP/UIPs can be no more than a handful by region. Some elect to concentrate on specific sectors (such as wind turbines), some operate in specific regions, and others provide services to other ICP/UIPs or even host network companies. Connections are not the main driver of value in a regulated network company. With large asset bases, the focus is on asset management and network operations, and rightly so. Independent connections companies have a sole focus on the connections service. With this comes highly tailored cost-effective business models and the need to differentiate in the face of competition. It disappoints me that the utility industry, including the regulatory framework, appears to see the connections market in engineering terms – for example, high voltage connections, low voltage connections and so on. We independents classify the market by customer type – a residential developer has very different needs and priorities to a wind turbine installer, even if they both need a high voltage connection. This client focus is at the heart of why independents are successful. Looking ahead, the market share of independents will continue to grow, particularly in electricity. We might also expect some consolidation among ICPs as true service providers win out. Clearly, regulatory incentives that mirror electricity and gas need to be developed in water to enable a true multi-utility sector that meets all the needs of clients. Richard Harpley, managing director, TriConnex, an independent utilities connections provider UTILITY WEEK | 27TH SEPTEMBER - 3rd OCTOBER 2013 | 25