Utility Week

UTILITY Week 4th September 2015

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Page 7 of 31

WATER: Bristol Water decision due 3 November The Topic: CMA investigations CMA INVESTIGATIONS THE TOPIC 8 | 4TH - 10TH SEPTEMBER 2015 | UTILITY WEEK N ever has the Chinese curse "May you live in interesting times" been so manifestly felt by the utility industry. Even as the sector struggles to come to terms with massive upheavals in technol- ogy, the environmental agenda and social mega-trends, it is also in the unprecedented position of having Competition and Markets Authority (CMA) investigations on three fronts. The energy market, the distribution net- works' regulatory regime (p13) and Ofwat's AMP6 settlement for Bristol Water (p23) – and by association its methodology for all water company settlements – are all cur- rently under scrutiny at the CMA. This cre- ates a level of uncertainty and potential for change that cannot have been felt since each sector went through privatisation over a quarter of a century ago. For business leaders, there is an urgent requirement, therefore, to understand how the findings and remedies emerging from these investigations may affect business con- tinuity and strategy. As Jillian Ambrose points out (facing page), the reality may be that the CMA's rul- ings turn out to be of less importance than the bigger picture trends outlined above. Yet, as we explore on page 12, there are prec- edents for significant market intervention from the CMA, and certainly its early sug- gested remedies for problems in the energy market have shocked many by departing from pro-market orthodoxy. There may yet, therefore, be some profound implications for operations and for competition – especially with regards to the SME energy supply mar- ket, as discussed on p10. Nor is it just business leaders who need to be forewarned and forearmed with knowl- edge about the CMA's direction of travel. At the core of all three investigations is the role of utility regulators. So, as summer fades and holidays – if you were lucky enough to have them – rapidly become distant memories, Utility Week sums up the key findings and implications so far of the CMA's three-pronged advance into the world of utilities. JG The market is moving faster than the CMA. page 9 Regulator rum- bled: Ofgem in the CMA's sights. page 9 Microbusinesses under scrutiny: the suggested remedies for the SME energy market could have a profound effect on small business. page 10 How sticky are energy customers? Evidence suggests energy switching is actually strong sec- tors. page 10 Will prepay cus- tomers get smart fast tracking? page 10 Remedies road to implementa- tion: how likely to be implemented are the energy market rem- edies? page 10 CMA: Mythbuster: Which "theories of harm" for the energy market has the CMA proved or disproved? page 11 A tipping point for trust? Will the CMA investigation help re- build trust in utilities? page 11 How sharp are the CMA's teeth? A review of significant interventions of the past. page 13 In search of the Goldilocks settlement: Lois Vallely explains why no-one thinks network settlements are just right. page 13 The electricity distribution networks versus British Gas: the claws are out. page 13 Bristol Water's rebellion: Mathew Beech wraps up the key concerns in the clash between Bristol Water and Ofwat and analyses the CMA's decision. page 12 THE CMA ON THREE FRONTS Utilities, battered by the recession and the media, also face CMA scrutiny DISTRIBUTION NETWORKS: Decision due by 30 September ENERGY RETAIL: Decision due by the end of 2015

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