Utility Week

UTILITY Week 30th January 2015

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16 | 30th January - 5th February 2015 | utILIty WeeK Finance & Investment This week 'Challenging' outlook for SSE, says chief Falling customer numbers and consumption are contributing to difficult business environment SSE continues to face a chal- lenging business environment as falling customer numbers and lower overall consumption are compounded by its limited capacity to pass on falling wholesale costs through bills. In an interim trading state- ment, SSE chief executive Alistair Phillips-Davies said the "challenging business environment we identified at the start of this financial year is likely to continue into the new financial year". The company's wholesale generation output declined over the past nine months, particularly from coal- fired power, which dropped to 5.1TWh compared with 11.3TWh for the same period the year before. This was partly driven by lower average household electricity consumption, which was down 5.6 per cent, and gas consumption, which declined 15.8 per cent over the past nine months, while outright customer numbers dropped from 9.10 million on 31 March 2014 to 8.71 million. In addition, SSE's decision to react to Labour's price freeze threats with a fixed deal forced the company to buy much of its energy before the heavy wholesale losses of recent months, locking it into higher costs. "SSE is at a competitive disadvantage versus the peer group due to its decision to lock in its commodity expo- sure for 2014 and 2015 early to accommodate its price freeze pledge. Thus it is less able to benefit than its peers from recent weakness in commodities," said analysts at RBC Capital. JA Water UU accepts Ofwat's final determination United Utilities (UU) has accepted the PR14 price control for the period 2015/20 as set out in Ofwat's final determination. The regulator set out the final determinations on 12 December, and aer "careful consideration" UU said it has decided this offers value for all its stakeholders and has accepted the decision. UU said the determination ensures there is a "strong focus on customer benefits", includ- ing below-inflation bill rises and "high levels of investment". In a statement, UU said: "Although this is a challenging price control, we are confident that, with the plans we have in place, we can maintain and improve services for custom- ers and provide an appropriate return for our investors." energy UKPN supports low- carbon initiatives UK Power Networks says adopting just one initiative from its Low Carbon London project across the country would contribute up to 5g/kWh towards the government's carbon emission reduction target of 100-200g/kWh by 2030. Results from the £28.3 million project show that demand-side response contracts – which reward business consumers for reducing electricity consumption or generating electricity locally when required – could postpone multimillion-pound network investments and keep custom- ers' energy bills down. Customers in London could be saved £12 million on the cost of delivering electricity over the next eight years through volun- tary reductions in consumption at busy times on the network. energy New leaders at Green Investment Bank The UK Green Investment Bank (GIB) has assigned Peter Knott to the role of chief financial officer and Laurence Mulliez to non- executive director. Chairman Lord Smith of Kelvin said the GIB has "moved beyond the start-up" and empha- sised the importance of building the infrastructure needed to support its "long-term future as an enduring institution". Knott will take up the new job from his current position as chief risk officer. He will join chief executive Shaun Kingsbury as the only other executive direc- tor on GIB's independent board. Having previously worked at renewable energy producer Eoxis, Mulliez has experience in renewables technology and mar- kets. As well as becoming non- executive director, she will sit on GIB's investment committee. SSE's wholesale coal-fired output has declined Stock watch 1540 1520 1500 1480 1460 1440 SSE SharE pricE, 22-27 January 2015 22 Jan 23 Jan 26 Jan 27 Jan SSE SharE pricE, 30 DEcEmbEr 2014-27 January 2015 30 Dec 6 Jan 13 Jan 20 Jan 27 Jan SSe's share price took a hit in the last week of January as Ofgem announced a competition enquiry into its networks business, falling from above 1,500p to about 1,490p on 22 January. but on 26 January, SSe announced plans to cut its retail gas tariff, in a move that analysts say should help to ease political pressure on the supplier to pass on falling wholesale costs. the share price rebounded to 1,520p following news of the cut. 1650 1600 1550 1500 1450 1400

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