Utility Week

UTILITY Week 2nd May 2014

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

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26 | 2nd - 8th May 2014 | UtILIty WEEK Customers I am the customer Tony Smith "Failure to be transparent could look like a con trick" With just seven months until Ofwat sets water prices for 2015- 20, there is plenty to encourage us that PR14 will deliver what most customers want. Many water companies have listened to their customers and submitted price proposals at or below inflation. Ofwat's challenge on the cost of capital should reduce bills further and result in a better deal for customers. But if the legacy of PR14 is to remain a positive one for to bid-up their returns – nor present this to their custom- ers as something that is being imposed by the regulator. Ofwat should also recognise custom- ers' concerns on incentives. Failure to be transparent on this issue could look like a con trick to customers and critical industry observers. It could also undermine the credibility of a price review that set out to be customer driven. Tony Smith, chief executive, Consumer Council for Water customers, neither Ofwat nor companies can afford to ignore customers' strong opposition to the proposed regulatory financial incentives package for water companies. We can understand Ofwat's objective on incentives. But the strong weight of evidence from research by CCWater and a number of water companies is that most customers do not agree with the principle of water com- panies being rewarded for "doing the day job" for which customers will end up paying more. Water companies should reflect their customers' views on incentives and penalties in their revised plans and not seek This week Ovo lends expertise to community suppliers Independent supplier says back office initiative could create 500 new energy supply companies Ovo Energy has offered its sup- port and back office facilities to community energy schemes to help get them up and running. The independent supplier's Ovo Communities platform will offer its back office systems and expertise to help local authori- ties and community groups set up energy supply companies. Stephen Fitzpatrick, Ovo chief executive at said the plan would help build trust in the sector because trusted organisations, such as local councils, could supply energy. He said up to 500 new entrants could be created, adding that while increasing competition for his own business might seem strange, this was the "direction of travel" in the sector and he wanted Ovo "to be there first". Organisations that sign up will be charged up to 3 per cent for the wholesale costs that are incurred during the process, with any savings "passed through" to consumers. Fitzpatrick is confident that the initiative will not fall foul of Ofgem's Retail Market Review (RMR) four-tariff cap. He said a community supplier could apply for a licence lite, meaning the tariffs being offered do not count as Ovo tariffs. Another route around the RMR limits would be for Ovo to offer community tariffs as a regional tariff, which could vary from region to region but fill only one of the four tariff options. Energy secretary Ed Davey said at the launch that the platform was "an incredibly interesting business model" and would help to reach the most vulnerable energy consumers. MB EnErgy Industry costs fuel Co-op price hike Co-operative Energy has blamed industry costs for its decision to "finally" pass an electricity price increase on to its customers. The supplier said the costs of the Energy Company Obliga- tion (Eco), feed-in tariffs and increased transmission and distribution charges were behind the £28-a-year increase, which will come into effect from 27 May. There will be no increase to customers' gas charges. The average direct debit dual fuel customer can now expect to pay £1,176 a year. In November last year, Co-operative Energy said it would "absorb the burden" of increased costs over the winter but it would review its prices if it "misread the signals" about cuts to green levies made by the government. The supplier said it was "still experiencing a number of increases that came into play from the start of the year" and had to increase its prices. Ramsay Dunning, group general manager at Co-operative Energy, said: "We are not increasing prices to reward finan- cial investors. We are simply no longer able to absorb these government-imposed costs." The move comes only a few weeks aer Ovo and First Utility launched sub-£1,000 tariffs. Tom Lyon, energy expert at Uswitch.com, said he hoped Co-operative Energy's increase would not put customers off switching to an independent supplier. EnErgy Ofgem campaign targets best deals Ofgem has launched a campaign called "Be an Energy Shopper" to encourage customers to find the best deals for them. A survey accompanying the launch of the campaign revealed that 43 per cent of customers did not shop around to compare energy tariffs, and 45 per cent did not think they would save much money by doing so. Twenty-four per cent said the process was "too much hassle". Ofgem has launched a campaign website that includes comparison tools, a glossary of terms used on energy bills and links to useful sites. Dermot Nolan, chief executive at Ofgem, said: "We shop and compare prices for many things in life, yet we oen don't think to do the same when it comes to our energy bills, even when we could be saving around £200. "It has never been easier to go energy shopping and get a better deal on your gas and electricity." Energy secretary Ed Davey said the campaign would help consumers "get the benefits of more competition". Fitzpatrick: scheme 'will restore trust in sector'

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