Utility Week

UTILITY Week 22nd May 2015

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Page 10 of 31

UTILITY WEEK | 22ND - 28TH MAY 2015 | 11 Policy & Regulation This week Market opening timetable 'tight' Open Water concedes that MOSL needs to make quick progress to ready market for competition Open Water has highlighted the "increasingly tight timetable" faced by the water sector in ensuring the retail market is ready to open by April 2017. In the third version of the dra market architecture plan (MAP3), Open Water said "quick progress" needed to be made by Market Operator Services Limited (MOSL) in providing support to water companies. It added: "Experience from Scotland suggests that such readiness support is important to an orderly and effective market opening." Ahead of MOSL taking responsibility for most of the market opening process, Open Water said MAP3 would provide a "stable basis that would be crucial to support- ing company readiness" for market opening. However, the full version of MAP3 has not yet been published, with Open Water stating that an Ofwat review into credit arrangements had prevented it being able to publish a complete document. This is because the review, ordered by Ofwat to ensure the credit arrangements strike the right balance between protecting wholesalers and encouraging new retailers to join the market, could have "significant implications" on how the market operates. The credit arrangements influence many aspects of the way the market will work, including tariffing, financing and funding the retail business and the supplier of last resort arrangements. This element of MAP3 has now been postponed until July, and when published the revised MAP3 document should be "as close to the final version as possible". MB ELECTRICITY Wind subsidy ban set for May 2016 Newly appointed energy secretary Amber Rudd will put into action the Conservative Party's manifesto pledge to curb onshore wind through legisla- tion set to take effect next year. She said she would amend planning rules to give greater power to local communities, while subsidies for new wind- farms would be withdrawn. The cuts are not expected to affect the estimated 7GW of onshore wind already in plan- ning. However, in her first com- ments on energy since taking the post, the pro-climate action sec- retary also pledged to "unleash a new solar revolution" aimed mid-scale and roof-mounted solar. ENERGY Call for 'principles- based' regulation Energy UK has urged Ofgem to adapt regulation to support a new wave of non-traditional energy companies entering the sector by adopting principles- based regulation. The lobby group urged the regulator to focus on creating a framework that supported how the sector might evolve in the future rather than looking at particular business models. In addition, the "principles of good economic regulation" should be "central" to any new framework proposed. ELECTRICITY DNOs review system planning standard Electricity distribution network licensees will review and update an industry standard to ensure energy systems can support the growth of low-carbon technolo- gies. The Energy Networks Asso- ciation (ENA) said there was a need to "fundamentally review" ER P2, a licence condition on DNOs relating to the planning of their systems to make sure there is sufficient network capacity to meet peak demand. WATER AMP6 transition funding working The transitional funding granted to water companies between AMP5 and AMP6 has resulted in a smoother investment profile, early indications from Ofwat have revealed. Some £118 million was allowed for water services and £245 million for wastewater but the amount actually spent has yet to be reported. Ofwat said it would invite the water compa- nies to discuss their expenditure and how it delivered benefits and efficiency savings. Testing times for water companies Political Agenda Mathew Beech "Amber Rudd has been getting down to business" As the class of 2015 made their way to Westminster for the first day of the new parliament, newly promoted energy secre- tary Amber Rudd was already at her new desk at Decc. In the Conservative mani- festo, and what should be the blueprint for this 12-seat major- ity Tory government, there were promises to "halt the spread of onshore wind" and to develop the shale gas sector in the UK. Rudd has wasted little time and already committed to bring will continue to support the safe development of shale gas" – moves are happening behind the scene to support the nascent industry in the UK. Decc is already recruiting three senior policy advisers to the ministerial team to help fracking in the UK to bloom, and to boost the UK's gas supplies. While the SNP and Labour bickered over who is going to sit where in the Commons, Rudd has been getting down to busi- ness. in legislation to stop any new subsidies for onshore wind by May 2016. This is perhaps less scary for the renewables industry when you realise that her predecessor, the deposed Ed Davey, wrote in September that there was already enough onshore wind currently going through the planning system for the UK to hit its 2020 renewables target. Fracking is another area where Rudd is already looking to make headway. While the headstrong "going all out for shale gas" comment made by prime minister David Cameron in January 2014 was watered down in the manifesto – "we

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