Utility Week

UTILITY Week 5th February 2016

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UTILITY WEEK | 5TH - 11TH FEBRUARY 2016 | 9 Policy & Regulation This week Call to open up bids for network funding Industry body says allowing third parties to bid "could provide alternative routes to market" The Energy Technologies Institute (ETI) has called for the funding competition for network innovation projects to be opened up to third parties. ETI chief executive Dr David Clarke said opening up the Network Innovation Competition could provide alternative routes to market for outputs, and help to publicise the findings of projects, as long as distribu- tion network operators (DNOs) "were engaged in it". Currently DNOs compete for a share of £18 million annually, but Clarke said investment of "hundreds of millions" is required not only to undertake the projects but to properly disseminate the findings. He said: "I just don't think the DNOs, in a regulated environment, have the capacity to handle that scale of investment. That is the real challenge. "It really is the nuts and bolts detail – the real les- sons learnt. We have trouble doing that ourselves from our budgets, which are quite big." While only network operators can bid for funding, third parties have already led on projects under the pre- vious funding scheme, the Low Carbon Networks Fund, such as EA Technology on the My Electric Avenue project with Scottish and Southern Energy Power Distribution. Trade body the Energy Networks Association (ENA) said current arrangements have led to "highly success- ful" projects whose outcomes have become "business as usual". An ENA spokesman said: "Key to the innovation stimulus and its success is the partnership with industry, SMEs, technology developers and academia." LD ENERGY Smart meter benefits too 'optimistic' The assessment by the Depart- ment of Energy and Climate Change (Decc) that the smart meter rollout will bring £1 billion worth of benefits for network companies is based on inaccurate assumptions, North- ern Powergrid has said. In an evidence session to the Energy and Climate Change Select Committee on 2 Febru- ary, Northern Powergrid's chief executive Phil Jones said the assessment is based on "optimis- tic" judgements in what was a "relatively bullish assessment" to justify the rollout. But he said in the transition to low-carbon networks the important thing is "the manage- ment of uncertainty, and the best way of managing it is to remove it and understand it and the smart meter process will do that for networks in a big way". ENERGY NAO to review axed CCS competition The National Audit Office is set to review the £1 billion carbon capture and storage (CCS) com- petition that ministers axed at the eleventh hour last year. Responding to Labour's call for an investigation, auditor general Sir Amyas Morse said the spending watchdog would begin looking at the "costs that the government has incurred in running the latest competition". He said it would also exam- ine how Decc reconciled the cancellation of the competition with its aims to "maintain secu- rity of energy supply and reduce emissions". WATER Ofwat opens licence applications in April The water sector took a step closer to market opening last week, with Ofwat's proposal that new entrants will be able to apply for a licence to operate in the non-household retail market in just two months' time. The regulator confirmed that new entrants and existing incumbents can apply for a retail water supply licence (the new WSSL) from April – a year ahead of market opening in 2017, and six months ahead of shadow market opening in October. It also confirmed that compa- nies with existing water supply licences (WSLs) to operate out- side their appointed areas will need to apply for a new licence. The regulator said it had considered whether to allow existing holders of a WSL to be given modified licences, but this would mean the company had not been assessed against the obligations of the new licence, "raising questions" about cus- tomer protection. DNOs compete for a share of £18 million a year Political Agenda Mathew Beech "Party divisions make Brexit a thorny issue for the PM" Prime minister David Cameron has been locked in Number 10 with European Council president Donald Tusk trying to renegoti- ate the UK's relationship with the EU – and to avoid the pos- sibility of Brexit. Divisions within the Con- servative party make this a thorny issue for the PM. Five of his cabinet are expected to vote for the UK to leave the EU, while disgruntled backbenchers – including former ECCC member Peter Lilley – are becoming more put to the other 27 EU mem- ber states to decide upon, the looming referendum on Britain's place within the union is getting closer. It is rumoured the prime minister is keen for the vote to take place on 23 June. If the details in the final deal satisfy the Eurosceptics in his party and the wider electorate, the referendum may swing in his favour. If not, energy and water policy will need a complete rethink – as will the UK's place in Europe. vocal for Britain to go it alone. Energy secretary Amber Rudd finds herself in rare agreement with her Labour counterpart, shadow energy secretary Lisa Nandy, on this front. They are both for remaining in the EU. The only caveat is Rudd states she's in favour of remaining part of a reformed union. The key comes down to being part of a bigger group and having our voice "heard more loudly", as Nandy puts it. For Rudd, being part of the EU keeps Britain "in the room" and able to shape energy policy and climate change action. With the deal Cameron and Tusk have thrashed out set to be

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