Utility Week

UTILITY Week 11th December

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18 | 11TH - 17TH DECEMBER 2015 | UTILITY WEEK Policy & Regulation This week Interconnectors bid into capacity auction Including interconnectors leads to fears that in- vestors will shy away from building new gas plant The UK government's second capacity market auction began on Tuesday 8 December amid mounting concerns that includ- ing interconnector capacity could undermine the bid to bring forward new investment. This year's auction saw 2.4GW of additional interconnec- tor capacity eligible for the sup- ply contracts through the reverse auction, and concerns have grown that these power links might squeeze out new generators. Baringa Partners' Phil Grant said that the inclusion of interconnectors could have the unintended consequence of undermining security of supply. "These are not new interconnectors so don't add anything to the underlying security of supply for GB. Conversely, the award of a contract to an interconnec- tor means that the same volume of domestic capacity missed out on a capacity contract," he wrote in a blog. The capacity market auctions were designed to encourage investment in gas generation to replace the UK's closing coal-fired power fleet, but the competitive auction and low clearing price has posed a challenge to new investment. The UK's burgeoning distributed generation market could also undermine investment in large, centralised generation assets. Grant said the amount of this plant, including 1.5GW of diesel generation, was one of the main swing factors in determining the final price. The auction aims to secure 45.4GW for delivery in the winter of 2019-20. JA WATER Ofwat keeps TPIs at arm's length Ofwat has said it will consider regulating the behaviour of third-party intermediaries (TPIs) through an obligation on water retailers to only deal with those that have agreed to a set of standards. The water regulator said this would either be through an accreditation scheme or a volun- tary code of practice, and could be developed once the market opens to address "any specific issues that arise". Ofwat is consulting on issues relating to the protection of customers in the non-household retail market, and said it knows from the experience of other sec- tors and the water retail market in Scotland that a range of TPIs are likely to be active in the non- household retail market aer April 2017. ENERGY Energy UK looks to CAB for top recruit Energy UK has hired its new director of energy supply from the Citizen's Advice Bureau (CAB) in a bid to improve the industry's customer service and delivery. Audrey Gallacher is currently the CAB's director of energy, but Utility Week can exclusively reveal that she will join the trade association on 25 January 2016 to help the energy sector put consumer experience "at the heart of the industry". Energy UK chief execu- tive Lawrence Slade said in a statement: "She brings with her a wealth of experience in campaigning for consumers and her appointment is testament to the determination of the energy sector to work on improving the service and products they provide their millions of custom- ers. It is very important for any representative organisation to understand the issues and chal- lenge the way things have been done." WATER Stress tests results 'are confidential' Most water companies "objected strongly" to a proposal by Ofwat to publish the results of stress tests on their business plans, claiming they could be seen as a "profit forecast". The regulator proposed that companies perform stress tests on their forward-looking business plans and publish the results to demonstrate their financial resilience. However, many firms objected to publishing "com- mercially and price-sensitive information". Therefore, Ofwat said it "will not ask companies to publish the results of stress tests in 2016". Uncertain picture for new gas-fired plant Political Agenda Jillian Ambrose "Labour and the SNP can at least agree on carbon." The Paris talks this week have brought together more than 190 countries from across the globe to discuss the urgent need to tackle climate change. But closer to home it has also served to unite the increasingly fractured le wing sphere of UK politics. The Labour party might be divided over Syria but it is clear on climate: more needs to be done to decarbonise and the Tories are falling short. On this, even the SNP can agree. Horns might be locked north industry, and for the Scottish economy which plays host to much of the UK's wind power. Sturgeon's focus is firmly on chancellor George Osborne, saying she hopes the prime minister and energy secretary can be more persuasive where the Treasury is concerned. A united opposition is the best place to start. When it comes to climate change at least, both parties might find that "my enemy's enemy" is a friend aer all. of the border aer the national- ist deluge washed swathes of Labour MPs from parliament earlier this year, but this week Labour's Jeremy Corbyn and SNP leader Nicola Sturgeon stood shoulder to shoulder in calling for more decarbonisation ambition from government. Well, shoulder to shoulder in terms of national media cover- age at least. During Corbyn's one-day visit to the talks he told reporters the UK's rhetoric on sustainability must be backed up with action, and suggested a 100 per cent renewables target by 2050. Since the election it's been bad news for the renewables

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