Utility Week

UTILITY Week 4th April 2014

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UTILITY WEEK | 4Th - 10Th AprIL 2014 | 13 Policy & Regulation Political Agenda Mathew Beech "Ed Miliband is boasting [the referral] was his idea" With both sides of the House of Commons claiming victory in the wake of Ofgem's referral of the energy sector to the Competition and Markets Authority (CMA), I can't help but think they've all missed the point. Ed Miliband is boasting it was his idea: he mentioned it in Sep- tember as Labour's cost-of-living crisis campaign hit the headlines and shook up the market. The coalition, dazed by the unexpected le hook, scrambled around to cut energy bills and this as showing what would hap- pen if Labour got the chance to implement their price freeze. Less investment equals less new capacity. This would mean huge problems, not only for the government of the day, but for the whole country. Whoever is in power aer the election could be faced with the energy firms sitting on their hands, unable to invest in new forms of genera- tion, as power supplies fall away. And I can guarantee each side will blame the other. pushed Ofgem to look at the big companies – Ed Davey's letter to the regulator is exhibit A. However, as SSE took the bold step ahead of the CMA referral to freeze its own prices and promise to break up its own vertical integration – which were wel- comed by the energy and climate change teams – they appeared to have missed the fact that 500 jobs are going and investment in offshore windfarms and biomass projects is being scrapped. Labour should be seizing this as an example of how the coali- tion's energy policy is not instill- ing confidence in the market, while shedding more jobs. While Davey et al could easily highlight This week Compensation for blackouts to double Ofgem increases DNO payments to customers in an effort to get them to reconnect more quickly Grid companies must double payments to customers cut off in severe weather, under Ofgem proposals published on Tuesday. Distribution network opera- tors (DNOs) will be required to pay £70 per customer if they fail to meet minimum levels of service. A cap on compensation will be lied from £216 to £700 and payments are to be made automatically "wherever possible". The rule changes follow storms over Christmas that cut off power to around one million customers, with 16,000 off supply for more than 48 hours. Hannah Nixon, senior partner for distribution, said: "Many parts of Britain have seen some extreme weather conditions over the last few months and Ofgem has been proactively looking at ways to help consumers who face disruption to their energy supply in these situations. "We are committed to ensuring that consumers are provided with a reliable electricity service. During the 2013 Christmas storms, 95 per cent of customers who faced power cuts were reconnected within 24 hours, but we remain concerned about the 5 per cent whose supplies were off for an extended period. Increasing the financial payments would send a strong message to the network companies that they need to do all that they can to reconnect all customers as fast as possible." The regulator has already increased standard levels of compensation for power cuts during normal weather. Ofgem is consulting on the latest proposals and will publish a decision by 1 July. MD WATEr Government makes retail exit U-turn The government will allow water companies to exit the non- domestic market when com- petition is introduced in 2017, an environment minister has promised. Speaking at the House of Lords last week, Lord de Mauley said he would table an amend- ment allowing for retail exit during the third reading. The government had come under pressure from the indus- try, the environmental select committee and Ofwat to include an exit clause in the Water Bill. However, previously the gov- ernment resisted such a move, saying it could have a negative effect on household customers. rENEWAbLEs Windfarms 'do not affect house prices' Windfarms have "no signifi- cant effect" on property prices, according to research by RenewableUK and the Centre for Economics and Business Research. Researchers examined data covering more than 82,000 prop- erty transactions within a 5km radius of seven windfarms in England and Wales. They found no evidence that prices had been affected by the announcement, construction or completion of the windfarms for six of the sites. These were: Roskrow Barton in Cornwall; Kiln Pit Hill in County Durham; Scout Moor in Lancashire; Loscar in York- shire; Lindhurst in Nottingham- shire; and Ffynnon Oer in Port Talbot, Wales. The other windfarm, Little Cheyne Court in Kent, saw a reduction in house prices fol- lowing the announcement of the windfarm, but aer the erection of the turbines they "returned to the county-wide norm". WATEr Regulator spells out board expectations Ofwat has set out its expecta- tions for water companies on the information they must publish to demonstrate they are meeting the regulator's principles for board leadership, transparency and governance. In a shi of focus on cor- porate governance, in January Ofwat published the principles it expected water companies to follow. All water companies in Eng- land and Wales told Ofwat they would have a code in place by 1 April stating how the principles will be met. Some companies have already published their codes and are actively taking steps to meet the principles. Ofwat expects all companies to meet the principles in full by 1 April 2015. Christmas storms left thousands without power

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