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UTILITY WEEK | 17TH - 23RD JULY 2015 | 3 Leader Ellen Bennett This week 4 | Seven days 8 | Interview Alan Raymant, chief operating officer, Horizon Nuclear Power 10 Policy & Regulation 10 | News Water companies face 20-year targets 11 | Analysis CMA verdict on Bristol Water 13 | Analysis Third time lucky for water competition programme 15 | Market view Smart meter rollout is dumb 16 Finance & Investment 16 | News Drax faces £90m hit in climate levy change 17 | Market view Getting a handle on legal claims 18 Operations & Assets 18 | High viz EDF Energy's West Burton B 20 | Event Networks do the business 23 | Market view Corporate social networks play by their own rules 25 | Market view Could white label offerings feature in the water market? 26 Customers 26 | News Water challenge work 'must be impartial' 27 | Market view Enhancing the customer experience 28 | Market view Are you ready for smart meters? 30 Community 30 | Reader of the week Nicola Evans, Wales & West Utilities 31 | Disconnector A hollow victory for Bristol Water There was little call for popping corks at Bristol Water HQ last week. The company may be set to pocket £20 million more than Ofwat would have allowed, but at £429 million, its wholesale expenditure is still significantly below the £537 million it asked for. If the provi- sional rulings remain unchanged in the Competition and Markets Authority's (CMA) final analysis, due in September, Bristol Water will have won a small victory at a great cost. The CMA acknowledges that by its very nature no economic model can be perfect, and suggests that Ofwat may have placed too much emphasis on its totex benchmarking models. It also says it has identified "issues" with specific aspects of the specification and design of the models. Score one to Bristol Water, which has been outspoken in its criticism of the models. But the difference is small, resulting in an overall upwards adjustment of just £20 million. Moreover, the CMA has largely vindicated Ofwat's downward pressure on the cost of capital, which Bristol Water claimed le the company unfinanceable. The CMA's numbers have come up with a 3.65 per cent cost of capital – a whisker more than Ofwat's 3.6 per cent, but a good chunk less than Bristol's bid of 4.37 per cent. Score one to Ofwat. The CMA has dismissed a number of specific projects Bristol wanted to finance, including construction of the Cheddar 2 reservoir. It has also taken a swipe at the company's business plan, saying there is significant uncertainty about how much it will actually need to spend. It has put the average customer bill across the regulatory period at £159 a year before inflation. Ofwat would have had it at £155; Bristol Water at £187 – so Ofwat takes the day. The consequences for Bristol Water could be profound. The company's relationship with the regulator has been severely frayed by the dispute, and it will need to take action to address that. Ques- tions will be asked in the boardroom, with Bristol likely to become a takeover target once the final ruling is given in September, or even before. Thanks to this ruling, the company could be in play for a sum significantly less than its own view of its intrinsic value. That's a high price to pay for £20 million. Ellen Bennett, Editor ellen.bennett@fav-house.com Utility Week magazine is taking its annual summer break from next week. We'll be back in print with a summer special on 7 August, and then back to our usual weekly frequency from 4 September. In the meantime, we'll be bringing you news and analysis at utilityweek.co.uk GAS 17 | Market view Getting a handle on legal claims 23 | Market view Corporate social networks play by their own rules WATER 10 | News Water companies face 20-year targets 11 | Analysis CMA verdict on Bristol Water 13 | Analysis Third time lucky for water competition programme 25 | Market view Could white label offerings feature in the water market? 26 | News Water challenge work 'must be impartial' ELECTRICITY 6 | Interview Alan Raymant, chief operating officer, Horizon Nuclear Power 16 | News Drax faces £90m hit in climate levy change 18 | High viz EDF Energy's West Burton B ENERGY 15 | Market view Smart meter rollout is dumb 20 | Event Networks do the business 27 | Market view Enhancing the customer experience 28 | Market view Are you ready for smart meters? Knowledge worth keeping Visit the Downloads section of Utility Week's website http://www.utilityweek.co.uk/ downloads CGI: Market Ready? UK water companies in countdown for competition http://bit.ly/1EZCrbl Opower: Moments that Matter http://bit.ly/1BOm5SV