Utility Week

UTILITY Week 8th May 2015

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16 | 8TH - 14TH MAY 2015 | UTILITY WEEK Policy & Regulation Political Agenda Mathew Beech "There'll be a pile in the new energy secretary's in-tray" When the new government finally takes shape, there will be a significant pile in the in-tray for the new energy secretary – whoever he or she may be fol- lowing polling day yesterday. The Green Deal – the coali- tion's flagship energy efficiency policy, hailed by the then climate change minister Greg Barker as "transformational" – will be one of those things in the in-tray. With only 12,076 Green Deal plans in progress at the end of March, a new, and more accusing finger of rising bills pointing at them would be low- ered – at least for a little while. There is also the matter of getting a tough new EU climate package agreed by all member states; getting the Hinkley Point C deal signed off and construction started; making carbon capture and storage hap- pen; the small issue of shale gas and fracking; and many, many other issues sitting in the in-tray at 3 Whitehall Place – all with urgent stamped on them. successful, energy efficiency scheme is needed. Tackling energy bills will be a priority. Getting bills down by getting people to use less – with the added bonus of reducing demand and the need for new generating capacity – is something the new PM will be ensuring their representative at Decc gets on with quickly. The Green Deal failed to catch the public imagination and cre- ate the retrofitting wonderland Barker envisaged. Many homes remain cold and draughty. The energy suppliers could be keen on a retrofitting revolu- tion, too, as this would see bills fall for households, and the This week CMA allows Pennon to help Bournemouth CMA says Pennon can provide a limited number of back office services to Bournemouth Water The Competition and Markets Authority (CMA) has granted Pennon the freedom to provide Bournemouth Water with a limited number of back office services. The ruling follows the £100.3 million takeover of Bournemouth Water by South West Water parent company Pennon last month. The takeover has yet to be approved by the CMA, and the competition authority initially ruled that Pennon had to keep its business functions separate from its new acquisition. In a derogation granted to Pennon, following a request by the company on 23 April, the CMA has now stated that Pennon can provide a limited number of back office services to Bournemouth Water. These back office services include banking changes, new debt raising, dealing with tax, debt collection, and pooling surplus cash. However, the CMA has added that should the merger be prohibited, any copies of any information passed between Pennon and Bournemouth Water should be destroyed, with the originals being returned. The merger news marked the first major mergers and acquisition activity in the water sector following the conclusion of the PR14 process, bar the CMA's inquiry into Bristol Water's final determination. The CMA is expected to make a ruling on whether the Pennon takeover of Bournemouth Water can be completed by October. MB WATER Ofwat creates panel to shape market Ofwat is creating a panel to help shape how the non-domestic water retail market will function once it opens in 2017. The nine-person interim codes panel will feature mem- bers elected by the industry to consider changes proposed to the workings of the water mar- ket, and a regulator appointed chair. The group will assess and vote on changes to the wholesale-retail code, which sets out the operational terms that apply to all two-way arrange- ments between wholesalers and licensed retailers. It will also have to approve any alterations to the market arrangement code, which sets out the arrangements to establish the market operator and an advisory codes panel. This will include the process for creating, joining and operating the market operator. ENERGY Capacity mechanism investigation begins The European Commission has launched a state aid investigation into the impact capacity mecha- nisms have on the working of the EU's single energy market. The Commission said it would probe the workings of 11 capacity markets of EU countries – Bel- gium, Croatia, Denmark, France, Germany, Ireland, Italy, Poland, Portugal, Spain and Sweden – but if any distorting affects are discovered, the investigation could be extended to other mem- ber states, including the UK. The inquiry will investigate whether the government subsi- dies are favouring any particular type of technology, certain producers, or erecting barriers that hinder the flow of electricity between EU member states. WATER Call for companies to join AIM taskforce Ofwat has called on all of the water companies to join the abstraction incentive mecha- nism (AIM) taskforce to help tackle data quality issues for the scheme. Currently, only five water companies – Affinity Water, South East Water, Thames Water, United Utilities and Wessex Water – are part of the taskforce to help develop the AIM scheme. AIM was originally designed to provide a financial incen- tive and penalty scheme to the water companies, but a lack of available data meant Ofwat did not introduce the financial incentives for this price control period. This has been pushed back to the next price control period and for 2015-20 reputational incen- tives have been introduced while data quality issues are resolved. Pennon: can provide limited services, says CMA

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