Utility Week

UTILITY Week 30th October 2015

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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Customers This week CMA to assess future of evergreen tariffs CMA considers move to fixed-term contracts to prompt customers to engage in the market The Competition and Markets Authority (CMA) could force companies to offer only fixed- term contracts as a way to increase consumer engagement in the energy market. The CMA said it was launch- ing the consultation on the plans aer both Scottish Power and British Gas parent company Centrica proposed similar ideas around phasing out "evergreen" tariffs and instead moving all consumers to fixed-term contracts. Scottish Power and Centrica put forward the idea of ending evergreen tariffs as an alternative to the CMA's proposed transitional "safeguard tariff ". But the CMA said it was instead considering the move to fixed-term contracts as a measure to prompt customers on standard variable tariffs to engage in the market. The CMA argues that consumers would be encour- aged to engage in the energy market at the end of each fixed-term contract via notifications from suppliers. Both suppliers said in their experience, domestic cus- tomers on fixed-term contracts engaged in "significant numbers" following the receipt of an end of contract notification from their supplier – much higher than for the receipt of an annual statement or price increase notification. As a result of the "many responses" the CMA has received, the authority said it would extend the dead- line for its probe, and now expects to deliver its final remedies by April next year. The consultation on ending evergreen tariffs closes on 9 November. LD WATER Mousehold closed after taste issues Anglian Water temporarily closed its Mousehold water treat- ment works on 21 October fol- lowing complaints of "chlorine- tasting" water by customers in Norwich and the Broadland area. Water supply to the affected area was redirected from other parts of Norwich. An Anglian Water spokesper- son said: "We are satisfied we've now identified the source of the problem, Mousehold treatment works, aer identifying the same tastes and odours there. "The smell is being described to us as 'like chlorine or TCP'. However, customers can be reas- sured that we have not added extra chlorine to the water." ENERGY Smart rollout 'may not be the answer' Independent supplier Utilita Energy has warned that the smart meter rollout may not be the answer to increasing engage- ment in the energy retail market. Utilita's chief executive Bill Bullen warned last week that the smart meter rollout could result in "massive disengagement". The rollout is touted as the solu- tion to ending the billing issues that have plagued suppliers, increasing trust in the market. Bullen said: "My concern is that with the solution that is being put forward, it's just going to make everybody as bad as each other and I think there is a chance that actually we will get massive disengagement." He added: "We are already 90 per cent smart, so we are certainly not fearful of smart meters, but what the programme failed to recognise is that there are different consumers out there, and the benefits vary considerably between those consumers." ENERGY Prepay customers return to old meters Independent supplier Ovo Energy has called on the energy industry to do more to support prepayment customers who are locked out of the smart revolu- tion as larger suppliers lag. The supplier made the call as industry data revealed that the lack of prepayment options is undermining the smart rollout. The majority of customers who had a smart meter replaced with a prepayment option were given traditional prepayment meters instead. Only Ovo and fellow inde- pendent supplier Utilita offer smart prepayment as standard; British Gas and Eon are running smart prepayment trials. A spokesperson for Ovo said: "We think it's high time the rest of the industry caught up." Stir into action: customers on fixed contracts I am the customer Lee Brownsword "The UK has a need for more gas storage capacity" Energy security is a basic neces- sity in a modern economy. Any loss of supply to our members can cause significant damage to their manufacturing plants. Many industrial users operate continuous high-temperature processes such as brick kilns, and are unable to provide a demand-side response – and would be at risk of disconnec- tion before domestic users. Managing the UK gas and electricity network during peak periods should not be reliant In the event of a gas supply emergency, the largest consum- ers, such as ceramic manufactur- ers, are the first to be instructed to cease using gas. The British Ceramic Confed- eration continues to advocate the need for more gas storage for the UK. The market hasn't deliv- ered, and as a result we think measures such a Public Service Obligation are needed. Lee Brownsword, technical and environmental adviser, British Ceramic Confederation on either voluntary or imposed disconnections to balance the system. For those unable to offer a demand-side response this approach threatens jobs, damages productivity and affects investment decisions. Gas storage capacity has reduced due to capacity reduc- tions at Rough and Hornsea, and although the UK does not directly receive gas from Russia, about 15 per cent of imports to the UK are from Europe (where large sup- plies do originate from Russia). If gas supplies to Europe are disrupted this will impact the UK as this supply route is tightened and as Dutch and Norwegian imports are directed away. UTILITY WEEK | 30TH OCTOBER - 5TH NOVEMBER 2015 | 25

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