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UTILITY WEEK | 4TH - 10TH MARCH 2016 | 3 Leader Ellen Bennett This week 4 | Seven days 6 | People & Opinion 9 Policy & Regulation 9 | News Decc unveils capacity market overhaul 10 | Analysis How can the conundrum of the Levy Control Framework be resolved? 13 | Analysis The case for mid-point reviews for transmission and gas networks 14 Finance & Investment 14 | News Engie profit fall spurs transformation plan 15 | Market view The effect on utilities of the new mandatory Living Wage 16 Operations & Assets 16 | High viz Eon's Blackburn Meadows biomass plant 18 | Analysis Pennon restructures the group in readiness for the competitive market 20 | Market view Managing risks from small contractors in the supply chain 21 | Market view Ireland's choice of communications network for its smart meter rollout 22 | Market view Changes in market rules are needed to galvanise battery deployment 25 Customers 25 | News Fresh doubts over smart meter rollout 27 | Analysis Vulnerable customers 30 Community 31 | Disconnector JV a smart solution to water market opening Congratulations must go to United Utilities (UU) and Severn Trent this week, which have together found an admirably pragmatic solu- tion to the opening of the non-household water market next year. Their yet-to-be-named joint venture will be a formidable force in that market, starting life with a 26 per cent market share, and no doubt ambitions to grow far beyond that. By working together, the two water companies will cut costs and overheads – all the more important given the tight margins in the retail space. While there are no compulsory job losses planned, there will likely be difficult decisions ahead as they combine their two non-household retail teams and back office operations, but as they take cost out of the business, the customer will ultimately benefit. Every water company is currently in the process of deciding where they want to play. According to two straw polls conducted by Utility Week in recent weeks, the vast majority will be staying in the market. So far, of the water and sewerage companies (Wascs), only Southern Water has expressed doubts, while all the water-only companies (Wocs) barring Portsmouth, South East and Cambridge/ South Staffordshire have said they're in. Whether this picture will change on 2 April 2017 is another matter – aer all, no-one will know the true value of a business customer until the market opens, and switching rates and other dynamics become clear. Those tak- ing a long view will also be hoping that Ofwat follows the Scottish example and raises the retail margin in due course. This makes UU and Severn Trent's play all the more smart. In time, the business may become attractive as a standalone proposi- tion, given the scale that neither company could have hoped to achieve alone. If it were to be sold or spun out, the parent compa- nies would eventually realise greater value per customer than were they to have exited separately ahead of time. Competitors with ambitions in the retail space, whether incum- bents or new entrants, will be taking note. Partnerships, outsourcing arrangements and cost efficiencies are looking like the way to make this tricky market pay. • We're delighted to announce that free ticket registration opened this week for the UK's utilities exhibition, Utility Week Live, taking place at the NEC in Birmingham on 17 and 18 May 2016. The head- line theme this year is innovation. To find out more and register, go to www.utilityweeklive.co.uk. Ellen Bennett, Editor ellen.bennett@fav-house.com GAS 15 | Market view The effect on utilities of the new mandatory Living Wage WATER 18 | Analysis Pennon restructures the group in readiness for the competitive market ELECTRICITY 9 | News Decc unveils capacity market overhaul 10 | Analysis How can the conundrum of the Levy Control Framework be resolved? 16 | High viz Eon's Blackburn Meadows biomass plant 22 | Market view Changes in market rules are needed to galvanise battery deployment ENERGY 13 | Analysis The case for mid- point reviews 14 | News Engie profit fall spurs transformation plan 20 | Market view Managing risks from small contractors in the supply chain 21 | Market view Ireland's choice of comms network for its smart meter rollout 25 | News Fresh doubts over smart rollout Knowledge worth Keeping Visit the DownloaDs section of Utility week's website http://www.utilityweek.co.uk/ downloads Arcadis: Water sector innovation and perceptions of totex. http://bit.ly/1SaTP9F Wipro: Digitisation and the Internet of Things http://bit.ly/1LbI3Jt