Utility Week

UTILITY Week 2nd May 2014

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UTILITY WEEK | 2nd - 8Th MaY 2014 | 13 Policy & Regulation This week Eco changes will halt installations for a year decc's reduction of suppliers' Eco obligations could be disastrous for energy efficiency firms The proposed changes to the Energy Company Obligation (Eco) will cause a 12-month installation hiatus, the insula- tion industry has warned. Proposals put forward by the Department of Energy and Climate Change (Decc) would see the March 2015 Carbon Emissions Reduction Obligation (Cero) target reduced by 33 per cent, while a two-year pro-rata extension of the Eco elements would be made. As part of this extension, any supplier that has deliv- ered more than 35 per cent of its Cero target by the end of March 2014 can take the "carbon score" into the next period with a 1.75 upli. Richard Twinn, policy and public affairs officer at the UK Green Building Council, said this had caused a short-term peak in work as suppliers rushed to ensure as much work as possible was eligible for the upli. He said: "Unfortunately this surge may prove to be short-lived and is unlikely to continue in next month's statistics." Neil Marshall, chief executive of the National Insula- tion Association (NIA) said the proposed changes were a "disaster" for the industry. He told Utility Week: "[The upli] will result in virtually no Eco Cero work being undertaken by energy companies in the next 12 months, causing an absolute hiatus for the industry." The warning came as British Gas announced it had "temporarily closed" the affordable warmth element of Eco for new referrals until March 2015 because it had reached its target. MB WaTEr Holding companies 'should be more transparent' Ofwat has urged water company holding companies to be more transparent about their govern- ance structures. In guidelines published last week, Ofwat said the principles of transparency, managing risk and supporting long-term deci- sion-making should guide gov- ernance arrangements. Dra principles for holding companies were published in January 2014, but Ofwat said it had made "limited changes" in response to water sector views. According to the guidelines, the holding company struc- ture should be transparent and explained in a way that is "clear and simple to understand". ELEcTrIcITY Ofgem mulls action over connections Ofgem is considering action against electricity distribution network operators (DNOs) over their failure to open up the con- nections market to competition. Incumbent DNOs had three years until 31 December 2013 to demonstrate to the regulator that they were promoting com- petition across nine market seg- ments. This involved showing that independent providers were getting a reasonable share of the market in connecting distributed generation and new demand. In return, DNOs were to be allowed to charge an unregulated margin on the relevant activities. However, the industry as a whole has passed the competi- tion test for just one third of the market segments, aer Ofgem last week published decisions on the final tranche of applications. Ofgem will now set out how it will tackle the gaps in com- petition. Its options include a referral to the Competition and Markets Authority. WaTEr Anglian Water faces pricing allegation Anglian Water could be fined for anti-competitive behaviour relat- ing to allegations that its pricing of a connection to the Fairfield development in Milton Keynes in 2008 was unfair. Last week, Ofwat issued a notice as part of its continuing investigation. The latest notice follows an initial "statement of objections" issued by Ofwat in December 2011, in response to allegations the water company had exerted a margin squeeze on a competitor. Ofwat said that having reviewed the case, it "still has significant concerns" but "no assumption should be made at this stage that there has been an infringement of competition law". Installers left in the cold Political Agenda Mathew Beech "The parties have set out their stalls on onshore wind" With more than a year until the general election, the first shots have been traded in the war of words over wind turbines. First up was Labour leader Ed Miliband, who said Brits "must embrace" onshore wind, although he "understands" the problems some rural communi- ties have with having turbines on their doorstep. The solution, he said, is to have a UK wind survey and ensure they are "situated in the right way". The Tory's minister of many Lib Dem energy secretary Ed Davey, battle weary from previ- ous scraps with the Tories – "we have already fought the Con- servatives over capping onshore wind in this government – and won" – said the move would put up bills, and "be disastrous for business and jobs". So the parties have set out their stalls. Onshore wind is: great (Lib Dems); may not be great but we need it (Labour); and anything but great (Con- servatives). things Michael Fallon followed up with a pledge from the blue camp to stop funding for all new onshore windfarms. He effectively said the UK has plenty of turbines blight- ing the landscape and that we don't need any more. The fact that there is 13.8GW built, being built, or with planning permis- sion while the UK renewable target for 2020 is 11-13GW seems to back this up. This stance will go down well in the South West – one of the windier parts of the country – where the Conservatives are fighting with their junior coalition partners for seats in Westminster.

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