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Utility Week 7th March

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28 | 7th - 13th March 2014 | UtILItY WEEK Markets & Trading This week Ofgem's competition reforms 'fall short' Labour criticises regulator over measures to improve liquidity in wholesale power market A spat broke out between Ofgem and Labour last week over meas- ures to boost competition in the energy market. Heated words were exchanged aer the regulator confirmed measures to improve liquidity in the wholesale power market. These included an obligation on the big six to post wholesale prices two years in advance. Energy secretary Ed Davey hailed the announcement as "a significant and welcome toughening up of competition in electricity markets". However, his opposite number, Caroline Flint, accused Ofgem of "tinkering around the edges" and claimed its reforms "fall well short of what is needed". She said: "While David Cameron refuses to stand up to the big energy companies, the next Labour government will undertake the biggest overhaul of our energy market since privatisation." Ofgem swily retaliated with a statement saying Labour misunderstood the barriers to competition. If elected next year, Labour is promising to break up the big six and force all companies to trade in a pool. The regulator insisted its reforms went further, because they helped independents to access forward power prod- ucts, not just short-term trades. In a separate move to improve transparency, Ofgem is making large energy suppliers publish their annual "segmental statements" two months earlier. They will have to start reporting "return on capital employed", which is seen as a more meaningful measure of profit- ability than profit margins. MD WatEr Thames signs more Scottish businesses Scottish businesses, including hotels, banks, newspapers, retailers, manufacturers and an ice rink, are switching to Thames Water. The company announced this week it has signed up two hotel chains, Queensferry Hotels and the Edinburgh Collection, since December. According to Thames, it has signed deals with "a steady stream" of businesses since its first Scottish customer, Jurys Inn, signed in April 2013. More than 130,000 business customers have switched sup- plier since the market opened in 2008. There are 13 water and waste water suppliers operating in Scotland, but about 90 per cent of the Scottish non-domes- tic market resides with Business Stream, the incumbent. EnErgY 'Yes' vote to boost Scottish renewables The Scottish National Party (SNP) has claimed Scottish independence would enable Scotland to "lead the world" in renewable energy. The remarks were made following the release of statistics that show carbon emissions from power stations in Scotland have decreased by more than one-third in five years. Figures from the Scottish government revealed that green- house gas emissions fell from 18.848 million to 12.147 million tonnes of carbon dioxide equiva- lent between 2006 and 2011. Rob Gibson, SNP MSP, said: "Scotland has the potential to lead the world in renewable energy – a 'yes' vote will allow us to continue to prioritise action to reap the rewards of this incredible resource." EnErgY UK agrees to 2030 renewables target The UK will accept an EU-wide target to obtain 27 per cent of energy from renewable sources by 2030, energy secretary Ed Davey said in Brussels on Monday. The move represents a departure from the UK's previ- ous position to support a single carbon reduction target, with no specified renewable target. However, he maintained there should be no binding renewable targets on member states. Discussing blueprints for a 2030 climate and energy framework at a meeting of the Environment Council, Davey repeated calls for an "ambitious and flexible" package. He backed the EC's proposal to target a 40 per cent cut in greenhouse gas emissions and argued the EU should be prepared to go to 50 per cent if matched by similar ambition from the rest of the world. Power play: wholesale reforms are 'tinkering' Market watch 70 68 66 64 62 60 58 56 UK natUral gas price for next month delivery Jan Pence per therm Feb Mar UK gas prices rose almost 10 per cent on Monday as mounting tensions in Ukraine stoked fears of supply disruptions. the Kremlin's move to take control of crimea threatens around a tenth of Europe's gas supplies, which come from russia through Ukraine. On the IcE, gas prices for next-month delivery jumped to 61.5 pence a therm, reversing a downward trend from winter highs of 69 pence. David cox, managing director of the gas Forum, said that while physically the gas could be replaced from other sources, prices would "probably go up significantly" in the event that russia cut off gas supplies transiting through Ukraine. alternatively, Ukraine could put pressure on Europe to pay its outstanding gas bill in order to keep the pipeline open. "It is a bit of a no-win for the Europeans," said cox.

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