Utility Week

Utility Week 7th March

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

Issue link: https://fhpublishing.uberflip.com/i/271780

Contents of this Issue


Page 11 of 31

12 | 7th - 13th March 2014 | 12 2014 | UtILItY WEEK Policy & Regulation Political Agenda Mathew Beech "It's no longer the big six; it's now the big seven" Aer yet another attack on the regulator following the publica- tion of its wholesale liquidity reforms, Ofgem swily retaliated by claiming that Labour was missing the point. Not only that, the much-maligned regulator said it was going further than Labour's own proposals. The government then weighed in, launching its own attack. At Decc questions, Ed Davey and Greg Barker worked together to run the familiar "it's Labour's big six" narrative, before the Decc ministers refer to a "big eight" – because it is eight suppliers that are already eligible for Eco targets? With more people switching, independent suppliers flourish- ing and Ofgem putting pressure on the "traditional" big six to be more transparent and fairer to customers, Labour's arguments are starting to come up short. Despite a fast start, they seem to be fading in the final furlong as the finish line – the 2015 election – comes into view. and to highlight the coalition's efforts to help consumers: cutting bills, warmer homes and more competition, decreed Davey triumphantly. Then Barker took to the despatch box and subtly but significantly reinforced the angle of increased competition – he referred to "the biggest seven energy suppliers", a reference to First Utility or perhaps Utility Warehouse. Nothing headline grabbing, no fireworks, nor a fanfare, but there it was – "proof " that com- petition in the energy market is increasing. It's no longer the big six; it's now the big seven. And how long will it be This week Ovo exceeds Eco exemption threshold Independent supplier will become eligible for Eco at year end as customer base passes 200,000 Ovo has passed the "irrelevant" threshold for the Energy Com- pany Obligation (Eco) because it now has more than 200,000 customers. The independent energy supplier said the "vast majority" of these customers are dual fuel, meaning that Ovo has exceeded the 250,000 connec- tion exemption limit and will become eligible for Eco at the end of the year. Speaking to Utility Week, head of strategy Andrew Mack said: "We've seen Eco coming for several years. It's one of the least disruptive changes that our business will go through, so I'm not in the least bit worried about the impact it will have." He added: "In the scheme of what we've achieved in four and a half years [since Ovo was founded], Eco on its own is almost irrelevant." Mack said Ovo would not outsource its Eco respon- sibilities to "one or two nameless providers", but was looking at "more innovative" ways to meet the obliga- tion. He added that Eco was "ripe for reform" and said Ovo would like an energy efficiency obligation to be placed on all suppliers, while a "competition policy" should be created to help the smaller suppliers. Mack claimed Eco was "phenomenally complicated" and while the current system works for larger suppliers, smaller companies find it "unwieldy" and it can hamper their growth. The Department of Energy and Climate Change said it consulted "extensively" to set an "appropriate" thresh- old when Eco was being designed. MB ELEctrIcItY Consumers bear cost of nuclear bias A government bias towards nuclear is piling a "massive and unjustified" cost on consumers, Consumer Futures has argued. The deal government struck with EDF Energy to support a new nuclear plant at Hinkley Point fails to meet European competition rules, the watchdog said. It includes construction guarantees and a "strike price" of £92.50/MWh for 35 years. Chris Alexander of Consumer Futures said nuclear should be treated the same as mature renewable technologies. He wrote: "This kind of undue discrimination in favour of one technology over others consti- tutes a failure in the UK stimulus regime… Our fear is that failures like this will contribute to a mas- sive and unjustified transfer of wealth from the consumer to the project proponents." EnErgY 'Good value' WPD fast track confirmed Western Power Distribution will be fast-tracked through the next price control, Ofgem confirmed last week. The distribution network operator (DNO) will cut prices in 2015/16 by an average of 13.9 per cent in its areas, or about £13.50 off a typical house- hold bill. That saving has increased from the DNO's original submis- sion aer Ofgem cut its allowed equity return from 6.7 to 6.4 per cent. It was the only change to be imposed on the company, because the regulator said its business plan for 2015/23 "clearly demonstrates good value for consumers". EnErgY Government reviews biomethane tariff A review of the Renewable Heat Incentive (RHI) biomethane injection tariff will be conducted by the Department of Energy and Climate Change. The reas- sessment will take place to address concerns within the industry that large biomethane- to-grid plants are over-compen- sated under the current regime. EnErgY Decc leads efficient appliances policy The Department of Energy and Climate Change (Decc) is taking over control of energy-using products policy, seen as the big- gest single area for bill savings. Decc estimates more efficient appliances will save the average household £158 in 2020. It is the most substantial element in the government's calculation that policies will drive a net reduc- tion in bills of 11 per cent by the end of the decade. Ovo: the majority of its customers are dual fuel

Articles in this issue

Archives of this issue

view archives of Utility Week - Utility Week 7th March