Utility Week

UTILITY WEEK | 1sT - 7Th AUgUsT 2014 | 19 Policy & Regulation This week CMA to scrutinise wholesale markets Competition body will investigate 'opaque' electricity wholesale and energy retail markets The energy retail and electricity wholesale markets will form the focus of the upcoming Compe- tition and Markets Authority (CMA) probe. In a statement outlining its initial theories on what might be damaging competition, the CMA said "opaque prices" in the wholesale electricity market could be to blame. It added that the vertically integrated firms may be harming non-integrated rivals by charging them more for wholesale electricity or by limiting the sale of electricity to them. The CMA said the significant influence of the major companies in the electricity generation market could be leading to higher prices, and that suppliers have weak incentives to compete on price and customer service. Areas excluded from the probe include transmission and distribution, the wholesale gas markets and gas interconnection and storage. Roger Witcomb, chair of the energy market investiga- tion group, said: "We are looking to identify the underly- ing causes, at both wholesale and retail level, which could be leading to the widespread concerns that have surrounded this market in recent years." SSE chief executive Alistair Phillips-Davies said: "Whilst we will work constructively with the CMA to demonstrate the many features of the market that do work well, we also have a strong appetite for reform that is in the clear interests of customers and competition." The CMA is required to publish its final report by 25 December 2015. JA EnErgY Europe mulls 30 per cent efficiency target The European Commission has proposed a 30 per cent energy- saving target by 2030 compared with 1990 levels for all member states. The proposed target goes beyond the 25 per cent target that would be required to achieve a 40 per cent reduction of CO2 emissions by 2030 and "aims to strike the right balance between benefits and costs". The 2020 energy efficiency target was set at 20 per cent, and the Commission estimated that for every extra 1 per cent in energy savings, EU gas imports would fall by 2.6 per cent, decreasing dependence on exter- nal suppliers. Greenpeace criticised the target, saying it should have been increased to 40 per cent compared with 1990 levels. EnErgY Ofgem prepares changes to charges Conventional electricity genera- tors will face two transmission charges, but intermittent ones will only face a single charge under plans approved by Ofgem. The regulator has approved the Transmission Network Use of System (TNUoS) charging system known as WANM 2, which would split the TNUoS into two parts: a peak security tariff and a year-round tariff. This option was approved because "intermit- tent generators are not assumed to contribute to meeting peak security" demand, while conven- tional generation would. The new regulatory regime will be implemented from 1 April 2016. gAs Shale drilling licences available The UK government opened its licensing round for onshore oil and gas drilling on Monday. The Department of Energy and Climate Change (Decc) said it has given companies details about how to apply for licences to start initial exploration. Newly appointed business and energy minister Matthew Hancock said unlocking the UK's shale gas potential could help enhance security of supply. The government was quick to add that the tender is only a "first step" which does not give absolute agreement to drilling. "Any further drilling applica- tion will then require planning permission, as well as permits from the Environment Agency and sign-off from the Health and Safety Executive," Decc said. The development of the UK's nascent shale extraction industry has been mired in strong local opposition, and concerns about potential environmental risk. Phillips-Davies: 'strong appetite for reform' Political Agenda Mathew Beech "The Conservatives face a rebuilding job before May" Once upon a time, there was a group of newly elected MPs, starry eyed and eager to help create a better future. With a bounce in their step, and the will of the people behind them, they entered the embrace of the Commons… Fast forward four years and the fairy tale has become a night- mare for some of those working in the Westminster labyrinth. At this point in the electoral story, the finishing touches to the next chapter are being put in The beasts that are the stresses and strains behind the picturesque façade of Westmin- ster have taken their toll, and all three have said the time has come for them to move on to new challenges. The Conservatives face a rebuilding job – one started by a major cabinet reshuffle – before May next year. For the 23 for whom the story is coming to its conclusion, they are about to head off to find their happily ever a¥er. place. The lead characters have been chosen for the next battle of good versus evil, and the promises of a bountiful future are being penned. But in Tory Towers there seem to have been some last- minute rewrites. The party is try- ing to find 23 new candidates as it seeks that ever-elusive – well, since the 1992 election – parlia- mentary majority. Dan Byles, a well-respected member of the Energy and Cli- mate Change committee, is the latest to head for the exit. He follows, among others, former climate change minister Greg Barker and green conserva- tive champion Laura Sandys.

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