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UTILITY Week 9th October 2015

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8 | 9TH - 15TH OCTOBER 2015 | UTILITY WEEK Policy & Regulation Distribution network operators (DNOs) must take a more flexible role in network management to avoid or deter the need for network reinforcement, Ofgem has insisted. The regulator said it had found barriers to the increasing use of flexibility on the distribution networks, which must be removed to enable DNOs to move to distribution system operator (DSO) roles. ENERGY Ofgem: DNOs must 'manage networks more flexibly' "DNOs have engaged with innovation opportunities through their price control to develop flexible new approaches to network challenges," it said. "However, our analysis identi- fied some issues and barriers to the increasing use of flexibility on the distribution networks. "These include some hesi- tance to embrace new practices as business as usual, and a lack of clarity on some key arrange- ments, such as how DNOs would engage with consumers to procure flexibility, and the relationship between the system operator and a future DSO where there is greater involvement in local balancing." Ofgem plans to hold a joint workshop with the Department of Energy and Climate Change (Decc) in spring 2016. This week Water firms could take on flood defence Ofwat chief puts water companies 'in the frame' for taking responsibility for flood defence schemes Ofwat chief executive Cathryn Ross is considering transferring responsibility for co-ordinating and implementing flood defences to water companies. Speaking to Utility Week, she said water companies are "in the frame" for taking over from the Environment Agency on deliver- ing flood defence schemes. She said: "I'm really conscious that having created a regulatory regime focused on outcomes, that does put water companies in the frame for thinking about things that deliver outcomes that lie beyond the boundaries of the traditional water company. I think flood defence and flooding issues are one element of that. "I can envisage a situation in which water companies could perform useful functions around flood protection and flood defences." Ross said that this point in the regulator's develop- ment of the next price control is "the right time to ask the questions" as to whether water companies should take on such responsibilities. However, she added that she would want any change to the current system to be "properly market tested" to ensure it is the most efficient way of delivering flood defences. One of the UK's biggest water companies, Severn Trent, supported a debate on water companies' role in flood defences. A spokesperson said: "Investment in flood defence management is becoming increasingly important, but the budgets of local and national govern- ment are increasingly under pressure. "The question is: could the water sector do more in this area, as we did before 1989? We don't know all the answers, but we think the question is very much worthy of debate." MB WATER CMA stands firm in Bristol Water appeal The Competition and Markets Authority (CMA) has issued its final decision on Bristol Water's claims against Ofwat's price control, standing firm on its decision to back the regulator's call for lower customer tariffs. The CMA said Bristol Water's tariffs must be cut by 16 per cent for the period 2015/2020, a slightly more lenient challenge than the 19 per cent called for by Ofwat, but substantially higher than the 6 per cent put forward by Bristol in its original plan. The CMA's final findings found that the water company's wholesale expenditures should be allowed to reach £428.6 million. In Ofwat's price controls, the expenditure levels were set at £409 million, while Bristol Water's estimate was £537 million. ENERGY Labour sets out shadow Decc duties The Labour party's shadow energy team has agreed the policy responsibilities of each minister, with a greater focus on climate change policy. Shadow energy secretary Lisa Nandy has tasked one of the three supporting MPs in the shadow team with an undiluted focus on climate issues ahead of the 2015 United Nations Climate Change Conference in Paris later this year. Barry Gardiner will take on the full climate change brief, but Utility Week understands that Nandy will attend the Paris talks on behalf of the party. In contrast, the Conserva- tive-led government has been without a dedicated minister for climate change since Greg Barker's resignation in July 2014. Shadow energy responsi- bilities will be shared by Alan Whitehead and Clive Lewis. Whitehead will take on respon- sibilities for generation and transmission, and Lewis will drive forward Nandy's call for the democratisation of energy. ENERGY Ofwat waives tender rules for Tideway Ofwat has waived the usual ten- der procurement process rules for the Thames Tideway Tunnel to help deliver the project on time and keep costs down. The waiver notice has been granted to infrastructure pro- vider (IP) Bazalgette, meaning it does not have to conduct a regu- lated tender process for the three main construction contracts and the system integrator contract, the contract for an independent technical assessor and deals surrounding occupational health and access control and security. Ofwat said it is "satisfied" customers will be protected from unnecessary costs because all the contracts underwent a competitive tender process con- ducted by Thames Water before the IP licence was awarded to Bazalgette. Water companies: useful role in flood defence? "We look forward to progressing these work areas as part of a broader programme of work with Decc, intended to manage the transition to a smarter energy system," the regulator said. "Our work will also form part of a wider portfolio of related work in Ofgem, looking at issues related to the future development of the system."

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