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UTILITY Week 23rd October

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8 | 23RD - 29TH OCTOBER 2015 | UTILITY WEEK Policy & Regulation This week The government is facing possi- ble legal action aer it removed pre-accreditation for small-scale renewables developers through its feed-in tariff (FIT) scheme. Speaking in front of the Energy and Climate Change Committee (ECCC), the head of the renewables programme team at the Department of Energy and Climate Change (Decc), Gareth Redmond, said there has been ELECTRICITY Decc faces legal action over changes to feed-in tariff for renewables a "pre-action protocol letter" received in relation to the changes to the FIT pre-accreditation, a measure designed to give subsidy certainty for renewables projects in early development. "There is a conversation between lawyers going on," he added. Energy minister Andrea Leadsom said the department was confident it had done its due diligence over the proposed changes. "We looked at it from every angle including a legal angle. We're sure this is fair and the right balance between bill payers and developers. Just because someone may challenge it doesn't mean it isn't fair." During the hearing, Leadsom admitted that investor confidence in the UK energy sector has been hit due to the "policy reset" Decc is undertaking. The energy min- MP calls for UU to face government inquiry South Ribble MP will push for UU to be grilled on its handling of the parasite contamination incident A Lancashire MP is demanding that United Utilities (UU) faces a parliamentary inquiry into the cryptosporidium outbreak that hit the company in the summer. Conservative MP for South Ribble, Seema Kennedy, told Utility Week she will push the chair of the Environment, Food and Rural Affairs (Efra) commit- tee, Huw Irranca-Davies, to grill UU on its handling of the parasite contamination incident. UU issued a boil water notice to 300,000 properties at the start of August aer it found traces of cryptosporid- ium at its Franklaw water treatment works near Preston. This was not fully lied until the following month aer the water network was flushed and UV rigs installed to kill the last traces of the bug. A previous push to get the Efra committee to hold an inquiry into the incident, led by local residents signing a petition, failed, but Kennedy said that once the Drinking Water Inspectorate (DWI) has published its report into the incident, she will call for it again. "It is important for residents to have some reassurance from UU on this issue, and I will raise more questions on their behalf. There is a lot of uncertainty for residents and there is uncertainty of the cause, which has led to a lot of scaremongering. UU needs to answer these questions." Kennedy added she has urged the DWI to publish a timetable of when it is due to release its report on the incident, adding that once it has been published, "we can start getting answers". UU faces a higher than expected bill of £25 million as a result of the parasitic contamination because of the compensation payments to domestic and business customers, and for other associated costs. MB WATER System of negotiated settlement ruled out Ofwat chief executive Cathryn Ross has ruled out the regulator moving towards a negotiated settlement system like the one used in Scotland for future price reviews, despite calls for this from the industry. Speaking in London last week, Ross said the regulator wants to incentivise water companies to own the relation- ship with their customers "in a way that is genuine, nuanced, responsive and dynamic". For this reason, she said a negotiated settlement system, whereby the companies talk through the price control busi- ness plans with a customer representative body, makes her "uneasy" because a third party has been inserted into that relationship. Earlier this year, Wessex Water chief executive Colin Skel- lett called on Ofwat to base PR19 on negotiated settlements. He said the shi would "minimise the role of the regula- tor and maximise the role of the customers" and allow water companies to "own the relation- ship with customers". However, Ross dismissed this in her speech, and said while there will be a "step change" in customer engagement for PR19, this will come in the form of incentives and rewards for com- panies that "really get to know their customers". She added that developing these relationships with cus- tomers helped build trust and "conveys the idea of what might be called a social licence to operate". ELECTRICITY Incumbent TOs to face tougher competition in 2017 The UK's three monopoly trans- mission operators (TOs) will face tougher competition from 2017, when Ofgem plans to hold its first onshore tender round. The tender for new onshore electricity transmission infrastructure projects worth £100 million or more will mean the transmission companies – National Grid Electricity Trans- mission, Scottish Hydro Electric- ity Transmission, and Scottish Power Transmission – will have to compete against other firms for the right to build and own new, high-value transmission assets. Since 2009, links to offshore windfarms have been com- petitively tendered, and Ofgem estimates this has saved con- sumers between £200 million and £400 million so far. Now, it wants to apply the formula to new onshore electricity trans- mission infrastructure. Ofgem is now consulting on the detail of how onshore tendering would work, including how eligible projects would be identified and the revenue that winning bidders would receive from operating the links. The consultation will close on 11 January 2016. Cryptosporidium: 300,000 properties affected ister, when questioned by ECCC chair Angus MacNeil on the success of the capacity auction, also suggested the regime could be changed to ensure the UK has "guaranteed energy security". Leadsom said: "We are hold- ing the second auction soon and we do believe it will bring for- ward new gas plants. If it doesn't we may have to tweak the auction to make sure it does."

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