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Review In the balance Gas-fired power plant Many consented gas projects, including two big plants by Intergen, are on hold because of the uncertain investment environment • Intergen signed a contract on 28 October with Siemens to build two gas-fired power plants costing £1bn. • A final decision on whether to go ahead is expected in mid-2014. • The first capacity auctions are due to be held in the second half of 2014, which should bring forward investment for projects like Intergen's to come online in 2018 PR14 As the year draws to a close, water company bosses are left exhausted from the rounds of public consultation they have undergone this year as they grappled with the demands of PR14, a very different approach to regulation. Despite arguments over whether Ofwat should have been clearer about its expectations, water companies have grasped the nettle of PR14, getting their business plans in for the 2 December deadline and, with the odd notable exception, dutifully proposing price rises in line with or below inflation. Regulatory regime change Was it something we said? The carousel swung round at both Ofwat and Ofgem this year, with some departures more surprising than others. Jonson Cox, who arrived in late 2012, made his arrival felt with a cagerattling speech in March that set out his agenda. Plans went slightly askew when the chief executive you love to hate, Regina Finn, announced her departure months earlier than expected, smack bang in the middle of preparations for the price review. As Ofwat shamefacedly announced that In the balance Race Bank • entrica has threatened to abandon C plans for its offshore windfarm citing inadequate subsidies • Cost: £2bn • The project was not approved for a "go early" contract in November 14 | 13th - 19th December 2013 | UTILITY WEEK it had got its sums wrong to the tune of £10 million for the cost of the review, senior staff rallied round and companies stumped up the difference. Cox moved quickly to appoint Cathryn Ross to replace Finn and as the year draws to a close, Ofwat seems in a stronger position than it could have dreamed possible six months ago. Not so at Ofgem, where the sword of Damocles hangs over everyone's least favourite regulator. David Gray took over from Lord Mogg as chairman this autumn, but has yet to make any notable public statements, and is still on the hunt for a replacement for Alistair Buchanan, who departed this summer for a comfy chair upstairs at KPMG. Hot favourite for the job, acting chief executive Andrew Wright, ruled himself out in December, leaving the field wide open for what is possibly the most unpopular job in regulation. Retail Market Review Despite being trumped by David Cameron in the quest for headlines following the prime minister's promise to legislate suppliers to put consumers on to the cheapest tariff, Ofgem proudly unveiled its Retail Market Review (RMR) proposals – saying they would make the market "simpler, clearer and fairer" for consumers. Under Ofgem's plans, this translated to any consumer being left on a bad value "dead" tariff being transferred to their supplier's cheapest evergreen tariff. However, at the heart of the RMR proposals is the cap on the number of "core" tariffs to four per payment, fuel, and meter type. This has prompted a number of suppliers to remove some of their tariffs, including some of the cheaper offerings, with SSE among those that pulled the plug on some of its discounted tariffs. Npower went one step further than removing some of its tariff options and sold half a million customers as a way of circumnavigating the imminent tariff cap. The £218 million deal with Telecom Plus – owner of Utility Warehouse – saw Npower offload 770,000 of its electricity and gas accounts to ensure the two parties did not fall foul of the four tariff cap. Most of the RMR reforms will be in place by the time Big Ben tolls to signal in 2014, although white label suppliers will have an additional year to ensure they comply with Ofgem's "radical" shake up of the supply market. RIIO National Grid and the gas distribution networks have been through the RIIO mill and in 2013 it was the turn of the electricity distribution network operators (DNOs). Ofgem's all-singing, all-dancing new regulatory model calls on these monopolies to innovate, find efficiency savings and – most radically – talk to their customers. The DNOs did their homework and all pitched in price cuts for the 2015-23 period when they submitted their business plans in the summer. This was in no small part down to the accounting expedient of depreciating their assets over a long period of time. There are concerns from the renewables sector that some DNOs are planning to accommodate unambitious levels of low carbon technology. Still, a price cut is a price cut and it's an enviable top line in this climate of heightened anxiety over energy bills. Ofgem was pleased with the industry's efforts and in November anointed Western Power Distribution (WPD) queen of the RIIO carnival. WPD, which covers the South West, Midlands and South Wales, enters 2014 on the regulatory fast-track. Electricity North West and Northern Power Grid were asked to look again at their costs while UK Power Networks, SSE Power Distribution and SP Energy Networks have a lot more work to do before resubmitting their plans in the spring. Severn Trent Analysts watched Severn Trent with hawklike interest this summer as it managed to rebuff three takeover bids from a Canadianled consortium. The Long River consortium finally walked away from the bid because of an "absence of any meaningful engagement with the water company" after its third, £5.3 billion, bid was turned down on 7 June. Smart meters The great hope for re-engaging consumers with the energy market, bringing down energy costs, boosting switching rates, reducing overall energy consumption, and opening up the brave new world of the smart home is smart meters. However, the industry was worried that the "ambitious" rollout of 54 million smart meters may have become unfeasible. The government eventually gave in, announcing that the nationwide installation programme would be shunted back by a year – with the final deadline put back to 2020. But there has been some progress, with the all-important data and communications system contracts, worth £2.4 billion over 15 years, awarded to Telefonica, Arqiva, Capita, CGI, and Gemserv this autumn. Thames Water Thames Water's bids to fund the Thames Tideway Tunnel have not won it many friends this year. The company was within its rights to apply for an interim determination to add 8 per cent to bills in 2014/15 – but Ofwat turned it down in no uncertain terms, even threatening to claw back money. Its subsequent price review submission, the only one from a water and sewerage company to propose price rises, garnered yet more negative publicity.