Utility Week

Utility Week 9th May 2014

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UTILITY WEEK | 9Th - 15Th MaY 2014 | 13 Policy & Regulation This week Welsh Water proposes cutting bills by 6% Revised business plan promises same level of investment, but with deeper price reductions Welsh Water has proposed fur- ther cuts to average bills for 2015- 20, bringing the total reduction to 6 per cent before inflation. The proposals form part of Welsh Water's revised business plan for the next asset manage- ment plan (AMP6), submitted this week. In its original business plan in December proposed a 4.8 per cent reduction. Northumbrian Water (NWL) was the only other company to submit a revised business plan for an early determination. It was not available for comment and its plan was not publicly available. Having examined both plans, Ofwat said the compa- nies had applied "best endeavours" to address the gaps identified in its risk-based review in April. The move follows the publication of dra determina- tions for the enhanced companies South West Water and Affinity last week. Both had proposals to reduce bills further – by 7 per cent and 11 per cent, respectively – accepted by Ofwat. Welsh Water's latest proposals will see average house- hold bills fall by £26 on current prices. The company said it was reducing bills further to reflect the lower weighted average cost of capital allowed by Ofwat, 3.85 per cent for 2015-2020, down from 5.1 per cent in the current cycle. It said it would still invest £1.5 billion in its network during the next cycle. Chris Jones, Welsh Water chief executive, said: "Despite cutting bills further, we've not cut investment or lost any of the benefits of our original plan." CM ELEcTRIcITY Solar Roc review 'imminent' The large-scale solar sector is braced for an "imminent" government review into the Renewables Obligation (RO) sup- port mechanism. The predicted review – which would be the third RO review for solar in three years – will likely reduce the subsidy. The Solar Trade Association (STA) said it had been "con- cerned about this prospect for some time" and warned that any changes to the support mechanism could undermine the sector. Paul Barwell, STA chief executive, said: "Investor confidence and market stability is essential to deliver sustained cost reductions for consumers and a healthy solar industry for UK plc." EnERgY Community energy held back by banks Commercial banks must open up lending to small businesses to boost investment in community energy projects, according to a report by think tank ResPub- lica's. It said that major banks were failing to lend to community energy businesses, which are crucial in achieving a diverse, sustainable and innovative market. It also urged the Treasury and the financial services regulator to offer further support to online "crowdfunding" platforms, which offer "an immediate opportunity to plug the invest- ment gap". Crowdfunding allows mem- bers of the public to contribute small donations through an online platform, oen resulting in the accumulation of large sums of money. WaTER Defra urged to implement water trading system Licensed water extractors should adopt a water trading system, to ensure water supplies are not affected during drought, accord- ing to the Institution of Civil Engineers (ICE). The Water Shares system, proposed by Defra in its con- sultation on abstraction reform, would give extractors a share in the available water resource, rather than an absolute amount, encouraging them to take a shared responsibility for water resources in catchments. According to ICE, this would increase the value placed on water and help to bring about a more collaborative approach to managing catchments but its benefits would depend on effec- tive implementation, manage- ment and regulation. Investment levels untouched Political Agenda Mathew Beech "The Tories have used the crisis to promote shale gas" On Monday, energy secretary Ed Davey joined his G7 counterparts to discuss how Europe needs to manoeuvre itself away from the barrel Russia has got them over. The G7 agreed that no "single energy power" – we all know they mean Russia – should be able to use energy supply as a weapon. President Putin has the ability to cut off the supply of Russian gas to Europe if he does not get his way. Davey, on his return from the meeting, trumpeted that the G7 their primary energy solution: shale gas. David Cameron has already said the Eastern Euro- pean issues should spur on the UK and the EU to embrace frack- ing and reduce their reliance on imported Russian gas. The Tories seem to want us to believe that fracking will lower energy costs, boost the economy via cheap energy prices and the subsequent re-shoring of jobs, and protect us from the rampag- ing Russians resolute on revolu- tion in eastern Ukraine. had agreed something needed to be done. They had not agreed what that something was, but the use of more coal was men- tioned. Not a move to keep the green lobby happy. However, Davey used the opportunity to push the renew- ables cause. He said this was the ideal chance to tackle climate change, because energy security and carbon reduction are "linked parts of the same challenge". Renewables, it seems, will not only help to cut the UK's carbon footprint, but they will also help to render Putin powerless. Not to be outdone, the Tories have also used the Ukraine- Russia crisis as a way to promote

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