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Utility Week 9th January 2015

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6 | 9th - 15th January 2015 | utILIty WEEK People & Opinion Crystal ball gazing Everyone knows you can't predict the energy market… so here goes for 2015. View from the top Jonathan Brearley, director, Brearley Economics S erious energy commenta- tors know that predictions are a mug's game. We plug in the latest price forecasts when appraising investments know- ing full well that a small shi in demand, or unexpected events in far off places, mean they are not worth the spreasheets they are written on. Take the oil price fall: few of us saw that coming. In fact, I recall two years ago seeing pro- jections from well known invest- ment banks that oil would be $150-200 a barrel by now. As a policymaker, you know that any change you make needs to be tested under a range of scenarios, including political scenarios, because not only do you have economic uncertainty, but with big policy trade-offs you have huge uncertainty about the future political direction. That said, how else would we kick-off the New Year unless it was with a set of new and com- pletely unfounded predictions? So, here's my top 5: 1. Climate change will re- emerge in the energy debate. As set out in my last column, with cost of living concerns start- ing to ease and an international agreement likely, politicians will focus once more on their record in reducing carbon dioxide emis- sions. We have seen Ed Miliband writing publicly about this, so expect more political competi- tion on the issue in the next few months. 2. The capacity market will clear higher next year. With Trafford stubbornly refusing to leave the auction, this year's price crashed through the floor. With the government, post-election, more comfortable paying a little more to keep the lights on, demand in the auction may be set more "generously". So unless there is another 'Traf- ford' in the pipeline, we could see prices climb higher. 3. CfD auctions will be a "success". Auctions are good for con- sumers and good for the industry and this will be no exception. It is not sustainable to have offi- cials calculating the price to be paid for large projects. We will see lower prices coming out of the auction than the headline values, but this is as good for the sector as well as for consumers. With prices set through competi- tion, consumers will have more confidence in the result, which will cement the longer-term sus- tainability of the industry. 4. Current gas prices will not stop shale gas exploration. Developing shale gas in the UK is not a short-term game and, despite the overblown claims, it is unlikely to have any impact on our market before 2020. How- ever, this means that investors are thinking about the longer- term price scenarios and so are less likely to be swayed by shorter-term changes. 5. Whoever wins the election, renewables are here to stay. On 7 December National Grid showed that wind power pro- vided enough power for 43 per cent of UK homes, which means renewables are already a funda- mental part of the mix. Equally, we now have a nascent indus- try driving jobs and economic growth and we have legal targets written into European law. Who- ever wins the election, we will still see the sector grow. Finally, you will notice that I have steered clear of a complete imponderable that you would hope would be clearer by now: who will win the election? Even, in my New Year predic- tion madness, I am not that "brave". Jonathan runs Brearley Eco- nomics - an energy/ climate change consultancy and can be contacted on: jonathan.brearley@live.com the following appointments, announced in 2014, took effect this month: Centrica chief Iain Conn became chief executive of Centrica, taking up a basic pay package of £925,000 a year. Conn, who's appointment to Centrica's board was announced in July 2014, was previously chief executive of BP Downstream. On the announce- ment of Conn's appointment, rick haythornthwaite, chairman of Centrica, welcomed his experience in leading "a consumer brand familiar to millions of people" as well as his deep knowledge of the energy sector. New boss for EDF Jean-Bernard Levy, became chief executive of EDF. the former thales chief executive, who was named was made the designate chief of EDF in October 2014, also has considerable experience work- ing in the telecoms industry. he was chief executive of Vivendi from 2002-12. Levy will now have to take responsibility for a final decision on building a new nuclear power plant at hinkley Point. SSE deputy chairman richard Gillingwater became deputy chairman of SSE. he is ear- marked to become chairman when Lord Smith of Kelvin stands down in 2016. Gillingwater will continue to fulfil his responsibilities as senior independent director and chair of SSE's remuneration committee while deputy chairman. Yorkshire Water Former chief designer for Ford Motor Company richard Parry- Jones took up the role of non- executive chairman at yorkshire Water. Since retiring from Ford in 2007 Parry-Jones has worked in non-executive roles for GKn and network rail. he has also acted as co-chair for the automotive Coun- cil, a strategic policy advisory body. ExECutivE appoiNtmENtS

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