Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/340220
UTILITY WEEK | 4Th - 10Th JULY 2014 | 19 Finance & Investment Stock watch 1940 1930 1920 1900 1890 Severn TrenT Share price, 24 - 30 June 24 June 25 June 26 June 27 June 30 June 24 June 25 June 26 June 27 June 30 June 885 880 875 870 865 uniTed uTiliTieS Share price, 24 - 30 June Shares in Severn Trent and United Utilities (UU) rose after both companies announced that bills would fall as part of their revised business plans. Shares in UU peaked at 886p on Monday, up from 880.5p at the previous close, after it said average household bills would fall 2.3 per cent in real terms over the 2015-20 price cycle. Severn Trent shares rose from 1,917p to 1,935p after it committed to cut bills by 1.5 per cent. This week NAO says Decc paid too much to go green Eight early renewables contracts were not put out to tender and locked up Decc's budget The Department of Energy and Climate Change (Decc) failed to protect consumers when it agreed eight early renewable energy contracts without putting them out to tender, according to a report by the National Audit Office (NAO). In May, Decc awarded contracts to eight renewable energy projects under the Final Investment Decision enabling for Renewables (FIDeR) scheme, worth £16.6 billion. The move was to prevent an investment hiatus in renewables but, according to the NAO report, it meant Decc committing 58 per cent of its budget for renewable energy projects under the Levy Control Framework until 2021. The NAO said it was concerned that without a tender process, Decc "may have increased costs to consumers". The NAO also said that having used most of the cash to support the eight projects (five of which were offshore windfarms), Decc "increased the risk of not obtaining support for later projects". The report said "it is not clear that the full scale of these commitments was needed so soon to meet the UK's 2020 renewable energy target". Decc defended the contracts, saying they offered better value for money for consumers than the previous Renewables Obligation support regime and that the gov- ernment had to drive through the reforms to deal with "a legacy of underinvestment and neglect in our energy system". MB REnEWabLES Offtaker of last resort will back CfDs The government has restated its intent to create an oaker of last resort (OLR) to provide a route to market for renewable generators. The OLR will offer contracts for difference (CfD) generators a guaranteed backstop power purchase agreement (BPPA) for the electricity they create. The OLR aims to guarantee eligible renewable CfD gen- erators a route to market in such a way that, alongside the competitive allocation of CfDs, reduces the cost of investment in renewable electricity generation, boosts competition, and lowers costs to consumers. Contracts will runs for one year and will have a termina- tion notice of six months. The price for the electricity under the BPPA will be discounted by £25/ MWh to the market. In its consultation response, the Department of Energy and Climate Change said there was "widespread support" for the OLR, and it added that "consum- ers will be better off with the OLR in place". ELEcTRIcITY Toshiba takes control of Moorside Toshiba has sealed a deal to take a majority stake in NuGen's Moorside nuclear project. The Japanese multinational has taken a 60 per cent stake in the project, having agreed to buy all of Iberdrola's 50 per cent stake in NuGen and an additional 10 per cent stake from GDF Suez. GDF Suez remains involved in the project and retains a 40 per cent stake. Three AP1000 reactors will be built at the Moorside site. They will provide 7 per cent of the UK's future electricity require- ment and make Moorside the UK's biggest nuclear complex. ELEcTRIcITY Decc tweaks FITs to help hydro schemes The feed-in tariff (FIT) scheme has been updated to "address an anomaly" for hydro energy projects, according to the government. The Department of Energy and Climate Change has introduced changes to allow developers of 100kW to 500kW hydro schemes to resubmit their applications and benefit from a new, higher rate. This means that hydro devel- opers could now receive the higher FIT payment of 15.59p/ kWh, rather than the lower amount of 12.82p/kWh. This will not apply to new projects, but only to those that were submitted to Ofgem between 1 December 2012 and 31 December 2012. The chosen few: five projects were offshore wind