Utility Week

Gas 16 | Market view The future for fracking 28 | News how Us shale gas affects the UK 28 | News PM wants to embrace shale WaTEr 6 | Opinion Cathryn ross, Ofwat 7 | Expert view nigel hawkins 8 | Interview Chris Jones, Dwr Cymru Welsh Water 21 | Analysis Ofwat on Wacc 24 | Market view a holistic view of totex ELECTrICITY 12 | Profile a tough year for Npower 15 | News Carbon floor price freeze 20 | Analysis Is biomass too risky? 22 | High viz nYsEG new York state, Us 23 | Pipe up Tom Francis, Met Office EnErGY 17 | Analysis 2030 renewable targets 19 | News SSE downbeat on investment 26 | News switching sites drive up bills 26 | News Collective switching 27 | Analysis The Community Energy strategy 28 | News IT scrimpers This week Leader Ellen Bennett Cost of living hysteria is killing investment And so to a conference last week, where Liberum Capital's Peter Atherton, always good value, outlined how Ed Miliband's size nines in the energy market had wiped £8 billion off the value of UK utilities relative to the stock market in a matter of months. Atherton argued that Miliband's threatened price freeze broke the longstanding "compact" between government and investors, which was essentially an unspoken agreement that investors would back otherwise financially unsustainable projects to meet policy objectives, while for their part, government would guarantee reasonable returns. That compact is now in tatters and companies such as Centrica and SSE are suffering the consequences. As other speakers at the Cornwall Energy conference argued, this is just one of the unintended consequences of Miliband's flat-footed intervention, which has ironically threatened the very survival of smaller, independent suppliers. Whether Miliband miscalculated, was misinformed or more likely, just didn't care, is a moot point. The current hysteria around cost of living is so damaging because it takes investors out of the picture. Like it or not, the energy supply industry is dependent upon private capital not just to finance the transition to low-carbon generation, but to keep the lights on in the first place. How much longer will investors gamble on a UK market where politicians can't agree on how much they should be allowed to make; the regulator could be for the chop; and no-one's at all sure what happens in 18 months' time? Regulated utilities fare better: while Ofwat's proposed 3.85 per cent Wacc squeezes investors, it does at least provide guaranteed returns out to 2020, hence the stable share prices of water companies this week (see p21). It's a stability energy suppliers can only dream of. Small wonder that SSE is scaling back its investment in generation (p19), following the lead of Centrica, which recently flogged off Race Bank windfarm and abandoned plans for gas storage. For RWE, with bigger issues on its mind, Npower is looking like an increasingly troublesome investment (p12). Indeed, if there were any likely buyers out there, the sale of at least one of the big six by the end of the year would look like a dead cert. 4 | Seven days 6 | Opinion Cathryn ross, chief executive, Ofwat 8 | Interview Chris Jones, chief executive, Dwr Cymru Welsh Water 15 Policy & Regulation 15 | News Carbon floor price freeze mooted 16 | Market view Shale gas developers must learn from other countries 17 | Analysis The fudge on 2030 renewables targets is progress of sorts 19 Finance & Investment 19 | News SSE downbeat about investment prospects 20 | Analysis biomass is too risky for most 21 | Analysis Ofwat at odds with water companies on Wacc 22 Operations & Assets 22 | High viz nYsEG new York state, Us 23 | Pipe up Tom Francis, Met Office 24 | Market view Totex in water companies 26 Customers Ellen Bennett, Editor ellen.bennett@fav-house.com 26 | News Switching sites drive up bills 27 | Analysis The Community Energy strategy 28 Markets & Trading The 6th National Utility Week Consumer Debt Conference is a must attend for all utility companies and telecoms operators who want to their collection procedures and reduce consumer debt. At this one day event you will: get the latest updates on the Retail Market Review; find out how smart meters will improve prepay services; understand how to assess the latest technology to enable customers to manage their bills; learn how to identify vulnerable customers; explore new methods to develop an efficient payment extension; understand how investing in customer segmentation can improve collection and minimise bad debt. 26 March, Holiday Inn, Birmingham city centre Website: www.uw-debt.net 28 | Market view Scrimping on IT puts up costs 30 Community 30 | Subscriber focus Tony Conway, United Utilities 31 | Disconnector UTILITY WEEK | 31sT JanUarY - 6Th FEbrUarY 2014 | 3

• Cover