Utility Week

Utility Week 7th August 2015

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UTILITY WEEK | 7TH - 13TH AUGUST 2015 | 13 Policy & Regulation This week Ofgem could give back £706m to networks RIIO-T1 and GD1 price controls could yield more funding for transmission and distribution networks Transmission and distribution networks could benefit from £706 million in further funding from Ofgem under RIIO-T1 and GD1 price controls. The consideration is part of the regulator's pre-defined RIIO uncertainty mechanisms, or reopeners, which permit compa- nies to seek funding for costs that were uncertain at the time of setting the price control. Of this, £667 million would be granted to National Grid (transmission and distribution) and £39 million to Scotia Gas Networks (SGN). In addition, the critical national infrastructure costs allowed for National Grid could be cut by £72.5 million from the previous price control period, TPCR4, following an efficiency assessment by the regulator. The applications have been sought to fund enhanced security to critical national infrastructure, streetworks and industrial emissions costs. However, Ofgem is pro- posing to allow less than the original amount requested by the networks, which was £828 million in total – £776 million for National Grid and £52 million for SGN. The considered adjustment amount would cause an average customer's electricity bill to rise by 24 pence per annum in 2016/17, against a claim for 29p per year. A gas customer's bill would increase by between 20p and £5.52 in 2016/17, depending on the network area. Overall, gas distribution charges currently make up 16 per cent of a consumer bill, with transmission charges accounting for 2 per cent of a gas and 4 per cent of an electricity bill. LV WATER Provisional CMA findings 'unrealistic' Bristol Water has said the Com- petition and Markets Authority's (CMA) provisional findings on its price determination are "unreal- istic" and "too low". In its official response, Bristol Water said the allowed revenue and the cost of capital are "insufficient" for the business to operate sustainably. The £429 million of wholesale totex revenue as proposed by the CMA is said to be "too low" because it "underestimated the business requirements". Bristol Water set out revenue levels of £537 million in its business plan. Bristol Water's response said: "The reduction in the amount of totex allowed for maintenance does not allow for a sustainable investment strategy, contrary to good practice in the industry and customer wishes." It added an "appropriate" bill level of £179 per year – up from the CMA's pro- posed £159 per year, but below the £187 originally proposed in its business plan – would be "comfortable" for customers, and allow for sustainable revenues. ENERGY CMA safeguard tariff will be considered The government will consider the safeguard tariff the Com- petition and Markets Authority (CMA) proposed as a way of protecting customers who have never switched from price rises. In a response to the CMA's provisional findings in its energy market inquiry, energy minister Lord Bourne said the Department of Energy and Climate Change will "look into the CMA's pro- posed solution of a safeguarding tariff which has the potential to protect those consumers who do not, or cannot, switch". The move would be designed to limit any impact of price rises of the standard variable tariffs on the 34 per cent of customers who told the CMA they have never considered switching energy supplier. GAS Fracking appeal could take 16 months Cuadrilla will not learn the outcome of its appeal against a decision to reject applications at two of its sites in Lancashire for at least 16 months, according to a Whitehall source. The source told The Guardian that civil servants are "con- cerned" that the appeal process may not conclude until Novem- ber 2016 at the earliest. "It is incredibly frustrating for the government," the source told the newspaper. Councillors said they rejected Cuadrilla's application because of the "visual impact and unacceptable noise". Out of the red? £706m could boost Grid and SGN Political Agenda Mathew Beech "Farron had to get creative with his appointments" Tim Farron is portraying himself as the saviour of the Liberal Democrats, the man to lead what they are calling the "fightback" aer the party was decimated in May's general election. From being in government, with 57 MPs and a 23 per cent share of the vote in 2010, the Lib Dems crumbled to eight MPs and less than 8 per cent of the vote. If sitting among his seven fel- low election night survivors on the opposition benches wasn't enough of a demonstration of Farron has chosen someone who graces Westminster, but the Lords rather than the Commons: Baroness Parminter. In the 22 roles including Farron's, there are six MPs, ten from the Lords, and six just from the rank and file party members, with no central government roles. The fightback may be under way, but it is a long and hard road back to Parliament's top table, especially when some of the team leading the resurgence is on the outside looking in. how far the party has fallen, Farron was reminded when he appointed his key policy figures. With 21 roles to fill, and only seven MPs to choose from, Far- ron has had to get creative with his appointments. The starkest reminder will come from energy and climate change. For five years, this was a Lib Dem area in government, with Chris Huhne and then Ed Davey leading the department. Now, aiming to fill the shoes le behind by the deposed and defeated Davey, is Lynne Feath- erstone. Ex-MP Featherstone, who was one of the many who lost their seats in May. For the environment portfolio,

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