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UTILITY Week 23rd January 2015

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UTILITY WEEK | 23rd - 29Th JanUarY 2015 | 15 Policy & Regulation itself different from what had gone before, but the next one has to be "more different". If if is the same as what has gone before, politicians and outside parties will lead the discussion on what the water sector should be doing. Liberum Capital utilities analyst Peter Atherton – another individual known for his challenging views – was also given a plat- form to speak his mind. He, like Tompkins, said the industry must change voluntarily before it is forced to do so – especially by politicians eager to be seen to be making a difference in a general election year. "Be proactive and work with Ofwat. Work with the other regulators to make that point. And be good corporate citizens. At the end of the day if your customers are happy, the media don't particularly hate the sector, and the politicians are less likely to come aer you," Atherton said. Coupled to this, by earmarking and debating change of its own free will, the industry gives greater certainty to investors – key priority number two – because they have greater sight of what may change, rather than facing up to a politically led change. This is especially pressing as we head into a general election where Labour has already set out its plan of attack, with the water industry squarely in its line of sight. If Labour is elected, they plan to give the regulator powers to modify water com- panies' licences to, in the words of shadow environment secretary Maria Eagle, prevent the "increasingly exploitative behaviour by some". Not one speaker mentioned the deba- cle that engulfed the water industry in 2012 when the regulator attempt to modify Sec- tion 13 of the companies' licences – but it was surely on everyone's mind. As Ross, whose predecessor Regina Finn le shortly aer the row, called for a mature and sensi- ble debate, the alternative – bodged reform, political intervention, or another unholy row – seemed all too obvious. This time, in every way, Ofwat is determined to do it differently. at the event to launch the Trust in Water strategy, those present had a chance to quiz Ofwat chief executive Cathryn ross on the detail. here are two of their questions. How does the sector have the debate while maintaining investor trust? Ross: "That's a difficult thing to do. First, we need to be really clear on what we're trying to achieve and what we are trying to do with the high level strategy. "Second, we need to be really clear on the fundamental principles of how we have that debate, have it in a genuinely open way. We want everyone to come with ideas. We will be very transparent about that debate. "There are some areas critical for investor confidence. We have a responsibility to move that conversation on quickly and give people the certainty they need." Is "upstream reform" the new euphemism for introducing competition in wholesale? Ross: "No. The reason I'm saying no is because upstream reform is a really wide term. It basically means looking at how those wholesale water services are provided, making sure water resources are used in an efficient way, and making sure companies are incentivised to make the right make-or-buy decisions." Questions from the floor Ofwat's strategic priorities • Deliver the reforms provided for in the Water Act 2014 – including putting in place the arrangements for opening up the non-domestic water market in 2017 and supporting the development of abstraction reform. • Maintain the confidence of investors in the water and wastewater sector and Ofwat's regulation of it, through this period of change. • Develop the means by which Ofwat monitors the sector's performance against its vision of trust and confidence, and receive assurance from the sector. • Ensure that Ofwat has the skills, experience, systems, processes and culture that sup- port its new strategy. Pan-UTILITY IMF downgrades global growth The International Monetary Fund (IMF) has downgraded its outlook for global growth for the second time in just three months, as it said a "shot in the arm" from tum- bling oil prices would not be enough to li countries out of their economic malaise. The IMF revised down its global growth forecast to 3.5 per cent this year, from a projection of 3.8 per cent in October. It said weaker growth would be driven by a further slowdown in the eurozone and China, and contraction in Russia, whose economy is expected to shrink by 3 per cent this year. EnErgY Germany backs single market Europe's energy union needs to be bolstered by EU laws binding on each nation, Germany has said in a policy paper, seen by Reuters, that sets it at odds with Britain. The European Commission is expected to publish soon proposals on a more closely linked single energy market to curb dependence on Europe's main energy supplier Russia. EnvIrOnmEnT Utilities pull out of EU CCS project Germany's RWE, France's Electricite de France, Swe- den's Vattenfall and Spain's Gas Natural Fenosa have announced their withdrawal from the Zero Emission Plat- form (ZEP), which advises the European Commission about CCS technologies. The companies say the technology behind the pro- ject, aimed at tackling global warming, is too expensive, according to a letter obtained by Reuters. Europe briefs

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