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UTILITY WEEK | 22nd - 28Th JanUarY 2016 | 3 Leader Ellen Bennett This week 4 | Seven days 6 | People & Opinion 8 | Interview Jonathan Simcock, managing director, data and Communications Company 12 | Event a sneak preview of Utility Week Live 2016 14 Policy & Regulation 14 | News Ofwat defines audit of water market opening 15 | Market view Marine asset licensing 18 Finance & Investment 18 | News Water regulation will be 'credit negative' 19 | Analysis Bidders line up for a stake in national Grid's Gdns 20 | Analysis Could global deflation sink hinkley Point C? 23 | Analysis Water M&a 24 Operations & Assets 24 | High viz Scottish Water 25 | Expert view rS Components 26 | Market view retaining megaproject managers 27 | Market view Your CrM must sophisticated 28 Customers 28 | News Businesses 'should avoid dSr trap' 29 Markets & Trading 29 | News Wholesale gas prices to fall further 30 Community 31 | Disconnector Bidders flock as gas future looks bright The race is on. News this week that Canadian pension funds OTPP and Borealis are lining up a bid for National Grid's gas distribution businesses fired the starting pistol on a race that could end in a record valuation. As analyst Nigel Hawkins outlines on page 19, gas distribution assets may not be at the most glamorous end of the util- ity market, but they are prized by investors for their steady returns. With National Grid's remaining gas distribution assets having a regulated asset value of £8.5 billion, a premium of 30 per cent could see a final valuation north of £11 billion (although National Grid is planning to hold on to a minority stake). A few years ago, it all looked very different. With the imminent demise of domestic gas in favour of electrified heat expected, some market observers thought the networks wouldn't have a future beyond the current regulatory control period. Two things changed. First, policymakers got real, with an understanding of the public attachment to gas-fired central heating, and the astronomical costs of a full-scale switch to electrified heat. Second, the sector launched an impressive fightback that has seen it transformed from the poor relation of the electricity networks to one of the most vibrant and exciting sectors of the market. Could the gas networks be used to store hydrogen, and so effec- tively to store renewable energy? Could they transport shale gas? What role will domestic gas play in a blended energy system? These questions and more are now being asked, as the gas networks con- fidently prepare for the transformations they will see in the decades ahead. The sector's leaders are to be congratulated on their part in changing the conversation: small wonder the buyers are lining up. • Investors, and potential investors, in water will be watching National Grid's auction process closely, because a high valuation of its gas businesses would likely ramp up the share price of the remaining three listed water companies. Water remains an attractive investment and as we report on p23, further deals are expected soon. Warning notes were sounded this week, however, with a Moody's classification of Ofwat's programme to 2020 as "credit negative", and analysts warning that domestic competition could deter foreign investment. With the cost of capital remaining critical to water com- pany finances, these are risks that Ofwat will seek to address in its review of the costs and benefits of domestic competition (news, p14). Ellen Bennett, Editor ellen.bennett@fav-house.com GaS 19 | Analysis Bidders line up for a stake in national Grid's Gdns 29 | News Wholesale gas prices to fall further WaTEr 14 | News Ofwat defines audit of water market opening 18 | News Water regulation will be 'credit negative' 18 | News Water regulation will be 'credit negative' 23 | Analysis Water M&a 24 | High viz Scottish Water's Shieldhall Tunnel 26 | Market view retaining megaproject managers ELECTrICITY 20 | Analysis Could global deflation sink hinkley Point C? 28 | News Businesses 'should avoid dSr trap' EnErGY 8 | Interview Jonathan Simcock, managing director, data and Communications Company 15 | Market view Marine asset licensing 25 | Expert view rS Components 27 | Market view Your CrM must be sophisticated Knowledge worth Keeping Visit the DownloaDs section of Utility week's website http://www.utilityweek.co.uk/ downloads Fujitsu: digital Inside Out Transforming Utilities. http://bit.ly/1V2xiKb Cognizant: Transforming the Customer Experience for UK Utilities. http://bit.ly/1Pim1TK