Utility Week

UTILITY Week 10th April 2015

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UTILITY WEEK | 10TH - 16TH APRIL 2015 | 11 Policy & Regulation This week The Scottish government will launch an investigation into the future security of the country's energy supply, following the announcement that Longannet will close next year. The parliamentary inquiry will consider supply, demand, the transmission network and market functioning as well as seek to answer questions about the role of new generation in ELECTRICITY Longannet news prompts energy security inquiry meeting demand and the impact of demand-side response on peak demand. Scottish select committee convener Murdo Fraser said: "It is imperative that this inquiry starts a debate in Scotland about how we can secure Scotland's energy supply and looks at the implications of the likely early closure of Longannet. "There are a number of wider issues at play here from the move away from fossil fuels to renewable energy, significant reform to the UK electricity market as well as the capability of the UK transmission network to meet demand. "It is the role of this commit- tee to establish the facts, ques- tion the experts, and scrutinise the actions of the UK and Scot- tish governments." CMA's network price probe moves ahead Authority invites interested stakeholders to send it representations or observations by 22 April The Competition and Markets Authority (CMA) will move for- ward with a probe into Ofgem's price controls for network opera- tors, with economist Jon Stern as the sole utilities expert on its three-person investigation panel. The CMA has accepted calls from British Gas Trading and Northern Powergrid to appeal against Ofgem's RIIO-ED1 price control decision, with the panel to include Stern alongside commissioner of the Gam- bling Commission, Graham Sharp, under the chairman- ship of John Wotton, former solicitor at Allen & Overy. While British Gas claims the controls for the eight- year period from 1 April 2015 to 31 March 2023 are too lenient, Northern Powergrid argues they are too tough. The CMA said both Ofgem and interested stakehold- ers are now invited to send representations or observa- tions to the CMA no later than 5pm on 22 April 2015. Utility Week understands that the CMA will have six months in which to investigate the appeals, but in the meantime Ofgem's price controls will hold. Northern Powergrid said any potential changes to RIIO-ED1 as a result of the CMA appeal "will not affect network prices until April 2016" at the earliest. The dis- tribution network operator said it "remains focused on delivering its customers' expectations and requirements both now and in the future. This includes investing to improve the network, reducing network charges, deliver- ing connections 30 per cent quicker and reducing the average duration of power cuts by 20 per cent." The four other affected networks declined to com- ment on the potential impact on their business plans of a retrospective change. JA, LV ENERGY Broker rules on hold until CMA findings Ofgem has shelved plans to introduce a mandatory code of conduct for energy brokers dealing with small business customers, saying it will wait for the Competition and Markets Authority (CMA) to report its findings on the ongoing energy sector probe. The code intends to protect non-domestic customers by compelling third-party interme- diaries (TPIs) to be clear and honest with businesses about which suppliers they represent and how they charge for their services. But rather than insist that brokers sign up to the code to do business, the regulator has said it will be voluntary until the CMA reports its initial findings this summer. "We are postponing our consultation on governance for the TPI code and the require- ment that suppliers only work with TPIs that are signed up to the code, by a few months," an Ofgem spokesman said. "This is so final proposals can benefit from any relevant CMA findings," he added. WATER Ofwat may correct PR09 'error' in PR19 Ofwat is seeking to correct an "error" that occurred in PR09 in the next price review period (PR19). The regulator is consult- ing on a dra PR14 reconcili- ation rulebook, which aims to claw back up to 2 per cent of regulated capital value (RCV) from the PR09 capital incentive scheme (CIS). The issue was first raised by Severn Trent that the established CIS methodology uses two dif- ferent assumptions to calculate the indexation for the regulatory asset base (RAB) adjustment. In the dra rulebook, Ofwat acknowledges it could have "taken a different approach to the treatment of indexation in the CIS calculations, which could have resulted in a lower RCV, but owing to the timescale and possible last-minute disrup- tion we elected not to do so." An Ofwat spokesman said there "had been issues" at the end of PR09 with an "error with the CIS scheme" and the new proposals "aim to correct that for customers and companies". The consultation on the rec- onciliation rulebook closes on 7 May and Ofwat aims to publish its final decision in July. ENERGY UK to be taken to court over Aberthaw The European Commission will take the UK to court over the failure of the Aberthaw coal-fired power plant to comply with its emissions rules. The Commission said there has been no reduction in nitro- gen oxide emissions from the RWE-owned coal plant since it warned the UK in October last year that it had two months to bring down emissions levels (see feature, p16). The Wales-based plant emits more than double the allow- able emissions under the Large Combustion Plant Directive, at 1,200mg/Nm 3 compared with the 500mg/Nm 3 limit, which has been in force since 1 January 2008. RWE said last year it would move forward with plans to update the plant with a new £12 million boiler in middle of this year and is considering the installation of a further two boil- ers within the next four years. Three-pronged approach: CMA investigation panel

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