Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/262834
utILIty WeeK | 21st - 27th February 2014 | 25 Operations & Assets Market view Thinking on your fleet Utilities should be aware of imminent legislative changes when it comes to fleet management, says Andrew Hogsden. T he challenging economic conditions of recent years firmly established cost control as the number one priority for utility fleet managers. While cost is likely to remain an important consideration in 2014, utilities should look to broaden relationships with fleet providers to prepare for legislative changes that will soon come into force. With the economy showing signs of improving, it presents the ideal opportunity for fleet managers to plan and prepare for significant proposed changes in taxation. Now is the time to consult with fleet provid- ers to understand and assess implications, re-examine policies and put appropriate systems, strategies and products in place to future proof fleets and business. One significant change is the proposed increase to benefit-in-kind (Bik) tax. From April 2015, the percentage applied on cars emitting more than 75g/km is set to increase by 2 per cent to a maximum of 37 per cent. This increase should prompt more utilities to review their policies, with efficiency front of mind. Part of that process will involve review- ing the composition of fleets and identifying opportunities to switch to low-emission, fuel- efficient vehicles in lower tax bands. As a result of this proposed change (and the harmonisation of Bik rates for petrol and diesel from April 2016), we are likely to see less debate around petrol or diesel as the preferred fuel choice and more emphasis on vehicle selection as a way to cut costs and enhance efficiencies across utilities fleets. As manufacturers release more advanced prod- ucts on to the market, businesses can rely more heavily on smarter vehicle choice as a more sustainable way of managing costs. CO 2-emission legislation and government funding will also promote advancements in electric and plug-in vehicles this year. But it will be traditional fuel models that meet current emission, efficiency and cost-saving demands that are likely to be the immediate game changers. Legislative changes aligned with the relentless development of new vehicle tech- nologies could place added pressure upon utilities fleet managers, given the consider- able size of the fleets they typically oversee. Managing and maintaining complex, diverse and oen highly specialised fleet networks from within can become a costly burden on resources. So it is no surprise we have seen a growing trend towards companies outsourc- ing management and maintenance in part or in full to specialised fleet providers. We certainly expect this trend to continue during 2014 as utilities look to ensure their fleets hit efficiency targets, remain fit for purpose, and are aligned with the short and long-term goals of their business. While outsourcing can ease pressure on organisations, the breadth of options and offerings can be daunting. Working in part- nership with specialist fleet consultants will enable operators to take advantage of oppor- tunities that will work best for their busi- ness. Whether it is an all-inclusive funding package, maintenance contract, or pick and mix approach, utilities can attain customised fleet solutions specific to their requirements. Part of that process involves looking at the big picture when it comes to assess- ing the cost of fleets. This whole-life cost approach will remain a powerful tool in providing companies with the true running costs for the life of the vehicle rather than the short-term purchase costs. As a result, fleet operators are able to make informed decisions that can ultimately improve the bottom line. Combine this with the specialist advice, infrastructure, and support fleet pro- viders can offer, then utilities are well posi- tioned to leverage cost-saving opportunities now that will also reap longer-term benefits. With legislative and taxation changes looming, pressures on internal resources intensifying, and more vehicle choice emerg- ing, 2014 will be a year of consolidation, planning and preparation for utilities fleets. But with these challenges comes opportu- nity. Particularly, the opportunity for com- panies to work more closely with their fleet providers to find new ways to become more efficient and resilient to economic and mar- ket changes now and in the future. Andrew Hogsden, senior manager, Strate- gic Fleet Consultancy, Lex Autolease The rollout • A total 53 million gas and electricity me- ters will be replaced. This will involve visits to 30 million homes and small businesses. • Over the period to 2030, the installation of smart meters will provide £6.2 billion net benefits to the UK: the programme will cost £10.9 billion and provide £17.1 billion in benefits. Contract winners • Data Service Provider (DSP): CGI – the contract is worth £75 million over 8 years. • Data and Communications Company (DCC): Capita contract worth an estimated £175 million over 12 years. • Communications Service provider (CSP): Telefonica (southern and central regions) – contract worth an estimated £1.5 billion over 15 years; Arqiva (northern England and Scotland) – contract worth an esti- mated £625 million over 15 years. • Smart energy code developer: Gemserv – worth £10 million over four years. CGI (the DSP) and there is a bottleneck there for sure in terms of testing meters. "It's an issue because everything has got to go through the same channel and be approved in the same way." At the moment, Shelley is unsure whether the timetable will slip, but admits: "Testing is going to be the key thing. "Everyone will want to do some testing live and the success of the programme will depend on the quality of the testing and the outcome of the testing. "I think it's going okay at the moment but with such a complex programme it's hard to guarantee nothing will go wrong." Decc tells Utility Week the testing phase "is on track at the moment" and that his company will continue to "work closely with industry, consumer groups and others" to roll out smart meters across the UK. Mar Apr May Jun July Aug Sep SIT complete SMDA testing complete Assume DCC environments are ready UIT complete and DCC go-live Comms hub testing start Jul/Aug 2014 Develop detail scripts Interoperability testing Functional testing Interchangeability testing Source: Energy UK