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UTILITY Week 29th January 2016

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12 | 29TH JANUARY - 4TH FEBRUARY 2016 | UTILITY WEEK Policy & Regulation Ofwat reviews service incentive mechanism SIM was never intended to be the final solution says regulator as it consults industry on changes The service incentive mechanism (SIM) is in line for "at least" a refresh, if not a complete redesign, Ofwat senior associate Stephen Beddoes has confirmed. Speaking in a panel discus- sion at the Utility Week Water Customer Conference on 20 January (p26), Beddoes said the regulator is looking at how the water industry can "move on from the SIM", which has "done a good job", but was never intended to be the final solution for increasing customer satisfaction. "It was very much the beginning of the journey," he said. "The intention was to incentivise companies to take that extra step themselves." Beddoes confirmed that Ofwat is starting to think through those ideas this month. "We've already asked a few companies to contribute through the marketplace of ideas forum and we'll take those on board. It may be that we think the SIM is perfect and carries on as it is; we may tinker around the edges; we may think, actually we've achieved what we set out to achieve and we'll get rid of the SIM altogether." The SIM was introduced in 2010 as a replacement for the overall performance assessment. Its aim was to incentivise companies to improve the quality of service and value for money they offered consumers. "When we brought SIM in, we were reasonably con- servative for a variety of reasons," said Beddoes. Now the water industry has "moved on", and it is a "blank piece of paper" in terms of how the customer service majors are going to look aer the next price review. LV WATER Yorkshire Water to attend flood inquiry Yorkshire Water will give evidence to a local inquiry into this winter's devastating floods, where it will be quizzed on whether it could do more to pro- tect its region from flooding. Calderdale council leader Tim Swi told Utility Week Yorkshire Water could "play a bigger role" through better management of land and control of reservoir levels, adding that it would be invited to give evidence at a meeting of the newly set-up Floods Commission. Yorkshire Water said it was "happy to accept" the invitation, adding: "We are keen to work with Calderdale Council on the issue of flood protection and look forward to discussing what further opportunities exist for partnership working." The commission will consider whether Yorkshire Water should be more flexible on adjusting the water level of its reservoirs. The council will also ask whether land belonging to Yorkshire Water could be better managed to prevent flash floods caused by poor drainage. WATER Yorkshire Water fined for pollution Yorkshire Water has been hit with a £600,000 fine aer an ageing sewage pipe burst, polluting a fishing lake in Wakefield. The company was sentenced at Leeds Crown Court aer pleading guilty to one charge of causing a water discharge that was not authorised by an environmental permit. Yorkshire Water was also ordered to pay investigation and prosecution costs of £24,000 to the Environment Agency, which brought the case to court. ENERGY Further delay to CMA's final report The Competition and Market Authority's investigation into the energy market has been delayed for a second time, with provisional remedies now due in March and the final report in June. This follows a six-month delay announced last Septem- ber, before which the final report was expected in December 2015. The CMA said the latest delay will allow it to "fully consider responses received following our publication of additional find- ings and remedies in relation to prepayment customers before Christmas". While the most recent guidance had been that the provisional remedies would be published in January and the final report in April, the statu- tory deadline was, and remains, 25 June 2016. SIM: incentivised companies to improve service Political Agenda Mathew Beech "The RO for onshore wind will end. Except it might not" The Conservatives were clear in their manifesto. Energy secretary Amber Rudd has made the point crystal clear: there will be no more subsidies for onshore wind. So much so that the latest Energy Bill – this time originat- ing from the House of Lords – initially had a clause in it to close the Renewables Obligation (RO) a year early to onshore wind. However, peers in the Other Place were not convinced and overturned this clause. This going to happen. As long as it gets added back into the Energy Bill and the government can squeeze it past the Lords. That should be the end of it. But it might not be. DUP MP Sammy Wilson asked Rudd what the consequence would be if the Northern Ireland executive wanted to continue with the RO. The response: "Consumers in Northern Ireland, and not Great Britain, should bear the cost." So it's clear: the RO for onshore wind will end. Probably. setback has not dented the gov- ernment's, nor Rudd's, determi- nation to prevent new onshore wind projects being developed. During the second reading of the Bill in the Commons, the energy secretary said, "there is no ambiguity in the matter," and reiterated the government's desire to see the end of onshore wind subsidies. "We will stand firm on them," she added. This means in the Commons, where the Tories enjoy a 16-seat majority, they will seek to reinstate the RO ban for onshore wind, and see whether the Lords are up for an energy policy fight. So the definite end to the RO for onshore wind is definitely This week

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