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UTILITY Week 6th March 2015

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8 | 6th - 12th march 2015 | UtILItY WEEK Interview On Monday, 23 February, the Environment and Climate Change Committee released a report that accused the UK's energy net- works of overcharging customers and ques- tioned the efficacy of the current price control framework. Committee chairman Tim Yeo said there is "clear evidence" that network companies are making higher profits than expected under the recently modified regime, which he also said is "too generous" and lacks challenging performance targets. Again, mildly but dogmatically, Smith denies these accusations. He points to the 17 per cent real-term reduc- tion in the cost of the UK's energy networks to tax pay- ers since privatisation in the 1990s. He highlights the 30 per cent increase in reliability of the networks over the same period and the £80 billion that has been invested in them. For 81p a day, he states, British tax- payers get a network service that is "the envy of many countries". Responding to other points of criticism from the relentless Yeo, Smith assures that competition for con- nections is active and that the networks are tirelessly seeking to improve their visibility and engage with stake- holders and customers. On competition, he says there is "lots" at "all levels". He adds that it is growing and that the introduction of a new code of practice this summer will help all partici- pants in the market. Smith declines to comment on the current investigation into SSE for alleged anticompetitive practices, or on the likelihood of other networks being in line for similar treatment. Visibility and engagement are more comfortable terri- tory. He talks happily about the local efforts of networks to improve public knowledge about their purpose and presence: "Western Power Distribution holds local sur- geries and advertises on TV. Scottish Power has been advertising on the side of buses." Such profile raising is not just a response to the nega- tive publicity that followed last winter's storms, Smith explains. It's part of a longer process that began in the last price control period and is essential if the networks are to prepare appropriately for a future involving dis- tributed generation, more renewables, demand response and electric vehicle use. "We've got to understand what communities want, expect and are planning for their localities," Smith explains. "Are there plans for new community energy schemes, a windfarm, solar farm, an electric vehicle scheme? What does a community require in terms of social housing or business parks over the coming years?" If the networks know these things now, they can feed them into their business plans and prepare for the tech- nical challenges involved. Perhaps even more impor- tantly, they can also get a better idea of where and how their customer-facing interactions will develop fastest. "In the past, networks have had relationships with properties," says Smith. "In the future, we need to have relationships with people. The networks will be the con- duit – the gateway – for the consumer experience of smart energy. If someone charges their car at the super- market, gets home and wants to export that energy to their house, it's the networks they will interact with." On a national level, ENA is working to support its members in their outreach and planning process, he adds. It hosts meetings of the Distributed Generation Forum to bring networks and generation developers around the table and has spearheaded the creation of a three-digit emergency number for electric- ity networks. This number is currently out to consultation and will help visibility and engagement, Smith claims. ENA has also published a public version of its own business plan for the first time this year. "We've always had one internally," says Smith, "but we thought it was impor- tant to have a way of easily showing other people what we are doing now." The first section in the glossy new business plan is, unsurprisingly, focused on politics and the media. It sets out the need for ENA to "engage proactively with debates about cost and transparency" and promotes the "vital role networks have in delivering on energy policy". In the run-up to the general election in May, ENA's capacity to communicate effectively on these scores will be put to the test and, as we speak, Smith says the association is in the throes of completing its election manifesto. Giving some insight into this agenda, Smith predict- ably begins with a call for stability in the regulatory regime and is direct in expressing his support for conti- nuity in the form and function of the regulator. "If Labour comes in and wants to change Ofgem, we would hope that they would maintain that core of Ofgem which is about regulation of the networks. Because it does work," he states. "The investment and savings that have been delivered bear that out." Other unsurprising priorities in the manifesto will be a focus on skills – especially science, technology, engi- neering and maths – and continued support for innova- tion, primarily via LCNI, but also through Innovate UK and the Catapult network, where Smith welcomes the appointment of Nick Winser, the former UK executive director of National Grid, as chairman of the new Energy Systems Catapult. Smith's final manifesto insight is less expected, but undoubtedly valid in today's heady political environ- ment of electricity infrastructure and supply. "Don't underestimate the importance of gas," he warns, explaining that it is still the fuel of choice for many people, and without it, billions of pounds would be added to the already gargantuan investment required in the UK's electricity infrastructure out to 2050. Not only that, but the gas sector needs clear under- standing and policy direction over the decline of North Sea gas and the potential of biogas – such as bio methane – in supplying heat. Smith concludes, "Gas has long been the forgotten fuel. Policymakers need to remain aware that it's not all about electricity." "If Labour comes in and wants to change Ofgem, we hope they would maintain that core of Ofgem which is about regulation" The future of networks – and the energy sector as the whole – is on the agenda at Utility Week Live, at the NEC in Birmingham in April. The ENA will be joining over 150 speakers, with dedicated sessions on smart grids, gas networks, emerging models for network operators and much more. Register now for your free place • 17 March, Demand Response & Future Networks Conference Paul Fidler, director of operations at the ENA, is speaking at Demand Response & Future Networks. See: www.uw-futurenetworks.net tM

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