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UTILITY Week 19th February 2016

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12 | 19th - 25th February 2016 | utILIty WeeK Policy & Regulation This week Water chiefs warn on domestic competition executives react to plan to begin introducing competition to the domestic water market by 2020 Water company chief executives have spoken out on the Treas- ury's plan to begin introducing competition to the domestic water market by 2020, with the chief executive of Anglian Water warning it will be a "total disaster". Speaking exclusively to Utility Week, Peter Simpson said the plan to set up a water retail market for households only three years aer the non-domestic sector has been opened to competition is "totally impractical". He added that if the timescale set out by the Treasury is enforced on the sector, both the non-domestic and domestic markets would suffer. "We would do two things really badly." Simpson warned the government should follow the Cave review more closely, introducing new markets into the sector on a gradual basis. Meanwhile, speaking at a public board meeting of the Consumer Council for Water, Northumbrian Water chief executive Heidi Mottram warned that opening the water market to competition could prove problematic for water companies when it comes to handling emergency issues such as floods. She said having multiple retailers involved would "make it more difficult" to deal with events: "If you have multiple retailers holding information in their area, first of all you've got to know that they're there in order to contact them in the first place and then get them all co- ordinating. It's undoubtedly a weakness in the system. "If we did it for household competition, it would be really, really difficult," she added. MB/LV Water Retailers get interim supply freedom Water retailers will be free to choose whether to participate in interim supply arrangements, and in which areas, Ofwat has confirmed. The regulator said it had decided to make it voluntary for alternative retailers – which are not the default retailer in the area – to opt in as an "eligible licensee for interim supply". In a separate consultation, the regulator confirmed that water companies must notify customers placed on a deemed contract no later than two months aer the start of the contract. Ofwat said that "most respondents" to its October consultation agreed with the notification period. reneWabLes Drax and Infinis lose High Court challenge to removal of CCL The High Court has ruled against a legal challenge to the govern- ment's 11th-hour removal of the Climate Change Levy (CCL) exemption, brought by gen- eration giant Drax and Infinis Energy. The companies initiated pro- ceedings for a judicial review in September, on the basis that the notice period of 24 days for the removal of the CCL exemption for renewable technologies was not sufficient. Drax said it will now "consider the judgment in detail". Chief executive Dorothy Thompson said: "In recognising our right to bring this case, the Court acknowledged that the removal of Lecs was sudden and unheralded. However, it con- cluded that the government had not provided any specific and clear assurances on the continu- ation of exemptions and accord- ingly ruled in their favour." energy Innovation could shorten price control Regulator Ofgem has acknowl- edged that continued innovation in the energy sector could call into question the eight-year span of the price control for network operators, but said it currently has "many advantages". Ofgem's senior partner, improving regulation, Martin Crouch, said at a conference that the current length of the control allows network operators to focus on customers rather than satisfying the regulator. He added that the price con- trol has the flexibility, through mechanisms such as the mid- point review, to allow the regula- tor to assess whether the outputs network companies are focused on are the right ones during the eight-year period. Simpson: domestic timing 'totally impractical' Political Agenda Mathew Beech "Decc is looking at a subsidy- free contract for difference" The government has made its agenda clear since it came into power last May. Subsidies for renewable technologies should be on the downward curve and removed as soon as they can compete financially with more established generation sources. Solar, wind and biomass have been at the forefront of Tory eagerness to be subsidy thriy. At Decc questions last week, the SNP's Brendan O'Hara called on energy minister Andrea Lead- som to restore investor confi- or risk-free to the bill consumer, and we are absolutely determined to ensure that we keep the costs down for consumers". She added that the fact the industry is look- ing at and seeking subsidy-free CfDs "suggests that our analysis that this industry can stand on its own two feet was correct". With Leadsom stating her department is listening to the industry on how a "market- stabilising CfD" can be delivered, there is still a green glimmer in the corridors of power. dence in the onshore renewable sector, which was badly shaken following the previous swathe of cuts since the Tory election win. Leadsom hit back: "It is not something that we would introduce just on the back of a fag packet." The government, despite dissenting voices on the back- benches, is committed to moving to a lower carbon economy, and that includes a greater penetra- tion of renewable generation – including onshore wind. The energy minister told the Commons that a subsidy-free con- tract for difference (CfD) is some- thing Decc is looking at, but "a subsidy-free CfD is not cost-free

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