Utility Week

Utility Week 8th November 2013

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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y Policy & Regulation This week Regulator wants to raise more from companies to recover the cost of the 2014 price review Ofwat seeks to triple cap on additional fees Ofwat is proposing to raise the cap on additional fees it can levy on water firms from 0.1 per cent of each company's turnover to 0.3 per cent, to fund delivery of the 2014 price review. Under the current cap in c ompanies' licences, Ofwat is able to recover an additional Raising the bar: fees levied on firms' turnover £9 million over a five-year investment cycle. That will rise to £27 million under planned licence changes. Ofwat said it did not intend to recover the full £27 million, but "considered it prudent to set the cap at 0.3 per cent to allow some headroom". The regulator said in July it would charge the industry about £27 million in 2014/15. Water companies have between them already had to pay an extra £3.2 million in 2012/13, after Ofwat admitted in July it had failed to budget adequately for the large-scale changes to the way it sets prices. Ofwat said the hike would be a "one-off" and fees would come down again in 2015/16, once the price review process was completed. However, it intends to retain the higher cap "to avoid another modification process, with the time and resource implications this has for us and the companies, should it be necessary to increase our fees, as we move towards the 2019 price review". Ofwat routinely consults on its forward plan for the following year, including licence fees. The amendment to companies' licences is subject to a consultation with the industry. If water companies do not consent to the change, Ofwat can refer the matter to the Competition Commission. CM Energy NEA: use windfall to relieve fuel poverty The government's VAT windfall from recent energy bill increases should be used immediately to help low-income families, according to fuel poverty charity National Energy Action (NEA). "The Treasury could gain around £150 million additional VAT revenue as a direct result of our higher energy prices this winter. We want to see this money used immediately to support existing energy efficiency schemes, especially in England," said an NEA spokesman. "We, along with over a hundred other organisations, also want to see revenue from other carbon and environmental taxes used to support all households in the UK suffering from fuel poverty," he added. More than 90 per cent of fuel-poor households will get no help to improve the energy efficiency of their properties, said the charity. "The vast majority of fuel-poor households (over 90 per cent), will not receive any help improving the energy efficiency of their properties this winter, next or even further into the future." Water Companies urged to pass on benefits Environment secretary Owen Paterson has written to the chief executives of water companies urging them to convert "unexpectedly high profits" into "tangible benefits for customers". Paterson said water companies must use record profits generated through lower financing costs, brought about by the economic downturn, to help customers by lowering bills or increasing investment. According to Paterson, "there needs to be a fair balance of risks and rewards between companies and their customers". His letter follows a pledge from the Labour leader Ed Miliband to "scrutinise" water companies as part of his campaign to cut the cost of living. Last week, Ofwat chairman Jonson Cox sent a letter to water company chairmen urging them to lower customer bills and Paterson said he "applauded this". Energy Rise in bill worries Almost half of consumers are worried about paying their energy bills this winter, according to the latest government survey. The seventh wave of the Department of Energy and Climate Change's public attitudes tracker showed that 48 per cent of people were "very" or "fairly" worried about paying their energy bills, up from 40 per cent in July this year, and marginally higher than September last year (45 per cent). Political Agenda Mathew Beech Ed Miliband has once again laid into the major suppliers and David Cameron. At PMQs last week, he did his best to portray Cameron as part of a "big seven: the prime minister and the big six energy companies". The Labour leader accused the PM of being "the unofficial spokesman for the energy companies" and having "gone from Rambo to Bambi" in failing to "stand up" to the big six. The solution, Miliband told the House, would be his price "Party leaders still at each other's throats over energy" freeze, which could come into force this winter if MPs voted to support it, rather than "kicking the problem into the long grass" with a competition review. Cameron fired back, saying the real answer to rising energy bills is "both competition and rolling back the costs of charges". Having discovered Miliband 12 | 8th - 14th November 2013 | UTILITY WEEK recently switched to First Utility, Cameron took joy in reminding him that First Utility chief executive Ian McCaig said a price freeze "could put me under". Cameron said Miliband had joined "one of these insurgent companies to cut his bills", adding he "comes here every week and attacks Tory policy; then he goes home and adopts Tory policy to help his own family". Elsewhere, energy minister Michael Fallon gave evidence to the Environmental Audit Committee and infuriated MPs – in particular the Green Party's Caroline Lucas – when he described why new nuclear is benefiting from a "market support mechanism" rather than a subsidy. Lucas later tweeted she was "even more certain" that new nuclear is being subsidised and "pretence otherwise is ridiculous".

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