Utility Week

UTILITY Week 3rd July 2015

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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UTILITY WEEK | 3RD - 9TH JULY 2015 | 19 Finance & Investment Stock watch 34 32 30 28 26 IGAS SHARE PRICE, 25 - 30 JUNE 25 Jun 26 Jun 29 Jun 30 Jun 34 32 30 28 26 IGAS SHARE PRICE, 2 - 30 JUNE 2 Jun 9 Jun 16 Jun 23 Jun 30 Jun Shale developer Igas saw its share price plummet after the decision by Lancashire County Council to turn down Cuadrilla's application to frack at a second site in the region. Cuadrilla is not a publicly listed company, but the share price impact on shale rival Igas was dramatic, with its shares falling from above 32 pence per share to an all-time low of around 26 pence on Monday 29 June. This week Cost of opening water market tops £40m £16.5m cost rise identified by Ofwat and MOSL after completion of the programme's design phase Water companies will foot the bill for an additional £16.5 million to fund the 2017 water market open- ing programme, as the budget has increased by two-thirds. Ofwat on Tuesday revealed that the budget for the opening of the water market to competition for non-household customers in 2017 is now £41.8 million for the period 2014/15 to 2016/17, with most of the extra costs coming from designing and implementing the central set- tlement system. This has seen the budget jump from the mid-level estimate of £25.3 million that was set out in 2013. The water companies will have to pay the increase in costs via an allowance in their wholesale price limits. If this fails to cover all the costs, the extra will be borne by investors unless further allowances are made in PR19. The budget includes the work being undertaken by Ofwat, that of Market Operator Services Limited (MOSL) and the tender for the central IT systems – which is currently down to a shortlist of four bids. Speaking exclusively to Utility Week, Ofwat chief executive Cathryn Ross said the cost rise has been iden- tified because now the design phase of the programme is complete, the regulator and MOSL have a clearer understanding of costs. She said: "Now MOSL and Open Water Markets Limited have done the specification of the central settlement system, we're in a much better posi- tion than we were or could have been a year ago to know what this is going to cost." She added the "budget is going to be kept under scru- tiny" by Ofwat and that the final total could be lower. MB ELECTRICITY Offshore wind 'must be subsidy-free soon' The UK's offshore wind sector needs to become subsidy-free as soon as possible to secure its future within the generation mix, Scottish Power Renewables has urged. Speaking at an industry event, chief executive Keith Anderson said a subsidy-free future "has to be our aim, has to be our ambi- tion and it has to be soon". He added: "We want to see subsidies phased out, and for the technology to compete on equal terms with mainstream generation. We can't expect gov- ernments to continue providing support indefinitely." Anderson's rally call to the industry came less than a week aer the government confirmed plans to cut subsidies for onshore wind, a decision that could cost Scottish Power around 1GW of planned onshore wind capacity if it fails to secure a place in the new contracts for difference subsidy scheme. RENEWABLES Green Investment Bank stake to be sold The UK's Green Investment Bank is set to move into the private sector in order to access larger pools of capital with which to finance sustainable investments. The plans were outlined at the bank's annual review event last week by business secretary Sajid Javid, saying it "will still be green, still be profitable, still be a market-leader in financing envi- ronmentally sound infrastruc- ture. But free from limitations on where it can borrow money and EU regulations on state aid, the bank will be able to access a much greater volume of capital." The Department for Business, Innovation and Skills said it will begin consulting on the trans- action which, according to the Financial Times, could involve as large as a 70 per cent stake "depending on market appetite". WATER Profits increase at Wessex and Affinity Wessex Water has increased its profit before tax by £11.4 million, bringing it up to £171.8 million for 2014/15, while Affinity Water posted an increase in its net profit of almost £9 million due to reduced costs as a result of its efficiency drive. Wessex Water also saw its annual revenues rise from £524.9 million to £540.3 million, citing the 3.1 per cent price increase allowed by Ofwat on 1 April 2014 as the main driver. Affinity Water's net profit of £93.3 million for 2014/15 was up from £84.4 million in the previ- ous year, partly as a result of the company renegotiating supplier contracts and lower debt costs. Let it flow: companies to finance the programme

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