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14 | 29th August - 4th september 2014 | utILItY WeeK Policy & Regulation This week Ofwat to rule on water firms' business plans regulator expected to reveal tough decisions in draft determinations on 2015-20 business plans Water companies were braced for some tough decisions to be handed down from Ofwat today (29 August) as the regulator prepared to publish its dra determinations on their 2015-20 business plans. Ofwat indicated its con- cerns over the summer. In early August, it wrote to Thames Water, Bristol Water and United Utilities to warn them that their bids exceeded its own calculations of their costs by a total of £1.3 billion. The regulator flagged up Bristol Water's wholesale water price control, the proposed separate price control for Thames's costs relating to the Thames Tideway Tun- nel, and United Utilities' wholesale wastewater price control. In each case, the company's bid is more than one-fih higher than Ofwat's projected efficient costs. Later in the month, it announced that the prices some water companies charged business customers from the opening of the market in 2017 could be set aer the cur- rent price review has closed. It flagged variations in water companies' proposed profit margins from business cus- tomers, from under £20 to over £100 per customer. Aer the publication of the dra determina- tions today, water companies may wish to request a change to the form of the five-year price control to give them more time to consider and address any problem, the regulator said. Companies have until 3 October to make representa- tions on the dra determinations to Ofwat. The regulator will then make its final determinations in December. EB energY CMA must consider effect of intervening The Competition and Markets Authority (CMA) inquiry into the energy retail market should investigate the unintended con- sequences of regulatory inter- ventions, according to a group of senior former regulators led by Professor Stephen Littlechild. In a letter to the CMA, the five former regulators argue that regulatory interventions in the market may increase customer and supplier costs and lead to weaker competition. The letter says: "The investi- gation should examine the effect of regulatory interventions on price levels and price dispersion, customer switching, customer choice and the products offered by suppliers, innovation, sup- plier profitability, new entry etc." The group welcomed the CMA's consideration of social objectives, and asked whether Ofgem's retail market review has limited the tariffs available to vulnerable customers. It called on the CMA to clarify Ofgem's role in setting prices. For more on the CMA investiga- tion, see page 15. energY Labour 'will act on energy firm abuses' A future Labour government would give the energy regulator the power to strip companies of their supply licences if they repeatedly broke the rules. Shadow energy minister Caroline Flint said "a tough new regulator" would be given the power to revoke energy supply licences if there was found to be "repeated instances of the most serious breaches". The opposition party said Ofgem had failed to bring an end to energy company mis-selling and poor customer service despite having issued 30 fines totalling £86 million since 2001. energY Energy brokers face code of conduct Ofgem has said it will move forward with plans to regulate the energy sector's non-domestic third-party intermediaries (TPIs) through a mandatory code of conduct that will be partially overseen by the regulator. Energy suppliers will only be allowed to engage with TPIs – such as brokers and other energy purchase advisers – that are accredited to the code. Ofgem's conclusion follows a recent industry consultation on how best to put in place a framework that ensures effective customer safeguards but lets TPIs offer value to customers through innovative services. Ofgem said it would finalise the detailed governance arrange- ments later this year. AMP6 costs face scrutiny Political Agenda Mathew Beech "Labour wants to be seen to be environmentally aware" MPs do not return from recess until Monday, but the summer break has been anything but quiet – especially for those on the opposition benches. This time last year, Labour was putting the finishing touches to the explosive announcement that Ed Miliband made at the 2013 party confer- ence in Brighton. Since then, the party has been on the front foot on the energy debate, and that was a position they were eager to and appeal to those who accuse the coalition of bending to the industry's every whim. The party wants to be seen to be environmentally aware, to scoop up the green Tories and Lib Dems alienated by the shale obsession, but also seen as a party that will embrace shale gas, and the promised bounties it will supposedly bring. Labour's tactic is clear: the energy debate has served us well over the past year, so let's keep it going right through to 7 May. maintain as Westminster went into its summer slumber. The shadow energy secre- tary – a title she hopes will be shorter this time next year – Caroline Flint has continued to grab the headlines. First it was the news that Labour would give the regulator powers to revoke energy supply licences should the companies repeatedly breach the rules. Ofgem has already got the power to remove licences in "specific circumstances", but Labour said it was keen to fill the regulatory gap it says is there, and give a regulator teeth. Labour also unveiled plans to tighten fracking regulations –