Utility Week

UTILITY Week 2nd May 2014

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enue = Incentives+ Innovation + Outputs), framework. RIIO sets out a range of power- ful incentives to ensure network operators continue to deliver the outcomes customers want, while continuing to lower costs, invest in infrastructure and fund the vital innova- tion that will enable the energy sector to meet future challenges. For their part, the network companies have responded to the challenge of RIIO by setting out clear plans for the price control period that will meet Ofgem's requirements and see operating costs remain broadly flat into the next dec- ade. That is no mean feat, consider- ing the demands that will be placed on the industry. Network companies are rightly proud of their achievements, and confident that they will continue to deliver for customers in the years ahead. They should also be proud of the wider contribution they make to both regional growth and the UK economy in terms of jobs and skills. ENA members directly employ 28,000 people, and will have to cre- ate an estimated 11,000 jobs by 2022 to manage changing technologies and smart grids. Network operators play a collective role in addressing skills shortages in the UK through the Sector Skills Council. Over the next 10 to 20 years, almost 80 per cent of the industry's workforce will retire, leaving a shortage of knowledge and skills at a time of unprecedented rewir- ing and adaptation of our infrastructure. The contribution networks will make to recruiting and training a new generation of engineers will inspire young people in all parts of the county. It will also be vital to our energy future. The networks can also point to remarka- ble improvements in health and safety since 1990. In the years since privatisation, fatal, major and over three-day electrical accident incident rates have seen an eight-fold reduc- tion and there has been a reduction of explo- sions across all gas networks. In recent years that success has been built on by the Power- 6 | 2nd - 8th May 2014 | UtILIty WEEK Comment I n recent months the issue of energy has risen up the UK political agenda, and it is clear that the debate over our energy future will form a key battleground in the general election in just over a year's time. As the industry takes centre stage, we in the network sector are welcoming an unprec- edented degree of attention, and looking to take advantage of the opportunities it will offer. ENA represents the distribution and transmission companies that have become accustomed to playing a vital but discreet role in the UK energy sector. As public atten- tion and political scrutiny have tended to focus elsewhere in the market, our mem- bers have quietly conducted their business, with impressive results. However, all that is about to change, and the impending inquiry by the Energy and Climate Change Select Committee into network costs demonstrates that the public profile of network operators is set to increase in line with wider political developments. This development will be welcomed by an industry that can point to an impressive track record, even if it has refrained from doing so in the past. Since privatisation the networks have delivered record investment, improved efficiency and reduced costs under a robust and stable regulatory regime. Between 1990 and 2010, companies invested over £35 bil- lion in our electricity networks, distribution costs halved and transmission costs fell 30 per cent in real terms. The gas networks have achieved similarly impressive results in reducing operating costs while improving reliability, efficiency and safety. In gas distribution, operating costs fell by 11 per cent from 2008 to 2013 and the availability of the network over the same period was 99.997 per cent despite some extremely challenging winters. Electricity distribution companies are in the process of agreeing their business plans with Ofgem for the eight-year price control period that begins in 2015. The gas and transmission networks are working to their agreed plans out to 2021. These are the first to take place under the new RIIO (Rev- Networks step out of the shade Transmission and distribution companies will come under the spotlight before the general election, but the industry has a great track record since privatisation and shouldn't be afraid to say so. Chief executive's view David Smith, ENA ing Improvement initiative, which brought companies and unions together with the aim of establishing the UK as a world leader in health and safety in the electricity industry by 2015. Thanks to the success of this collab- orative approach, that goal is in reach. Clearly the networks have a positive story to tell. Greater scrutiny will give us a plat- form to share that story with a wider audi- ence and build up goodwill towards a vital sector with a strong sense of public duty. It will also allow companies to engage with customers who may previously have been unaware of their local net- work operator. The benefits to the industry of greater public engage- ment were made clear during the winter storms, when many people were unsure who to contact in the event of a power cut. That level of disconnect with customers clearly does network companies no favours, and it is an area that must be addressed. ENA is now work- ing to develop a national commu- nication strategy for future severe weather events and building the profile of our members will be fun- damental to a successful, proac- tive approach. With our industry in the national spotlight we have a unique opportunity to make significant inroads into the public consciousness, which will benefit customers and companies alike. The Energy and Climate Change Commit- tee is preparing for its inquiry into network costs, and I would encourage people to fol- low the proceedings closely. For all of the reasons I have outlined above, the networks will be able to give a strong account of the industry's achievements and we fully wel- come the opportunity to stand by them in Parliament. In the years ahead, the networks will have to deliver an estimated £32 billion of investment in "wires and pipes" to keep people's lights on and homes warm, and at the same time keep costs to consumers on an even keel. In the context of that challenge the time for modesty is at an end. "The benefits of greater public engagement were made clear during the winter storms"

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