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UTILITY WEEK | 11TH - 17TH MARCH 2016 | 11 Policy & Regulation This week Ofwat to lift in-area trading ban in April New market entrants protest as incumbents will be allowed to consolidate business customers Incumbent water companies received a major boost this week with Ofwat's decision to li the in-area trading ban (IATB) from April, allowing them to con- solidate in-area and out-of-area business customers before the market opens in 2017. The news will be seen as a blow by prospective market entrants, who have campaigned against an early end to the IATB, arguing that its removal would give incum- bents an unfair advantage. However, Ofwat said it considered that any concerns about undue incumbent advantage "will be dealt with through other licence conditions", including conditions requiring compliance codes that all undertakers must have in place. The IATB prevents the market design envisaged by the Water Act 2014 and it is therefore necessary to remove the IATB before market opening in April 2017, the regulator said. "We have already engaged with stakeholders on our proposal and considered carefully the points made by those stakeholders on the removal of the IATB, particu- larly the points made by retailers currently operating in the Scottish non-household retail market, and we have concluded that it remains in customer's interests overall for the ban to be removed in April 2016," it added. The removal of the IATB will not have any practical effect in Wales. Ofwat said it had consulted with the Welsh government, and will hold a workshop this month on the application of the proposed market framework for small companies and Welsh companies. LV WATER Water firms must prevent supply gap Water companies must "lead the way" in taking action to ensure long-term resilience of the sector to avoid a gap between demand and supplies, the Department for Environment, Food and Rural Affairs (Defra) has insisted. In a recent paper, it said: "Without a step change in our national approach, lack of access to adequate water supplies could lead to some businesses being unable to operate while farmers and growers could lose crops or have lower quality crops." Water companies currently determine how to balance sup- ply and demand over a mini- mum of 25 years through the water resources management planning process. Defra argued that the planning framework had not "fundamentally increased" the resilience of water supplies or driven a step change in how water is traded between regions. ENERGY Feedback sought on DNO connections Ofgem is asking renewable gen- erators for feedback on distribu- tion network operators' (DNOs) performance on facilitating connections to local electric- ity networks as capacity gets increasingly constrained. Ofgem said feedback from the consultation will inform whether it decides to hand out financial penalties on DNOs for failing to meet the needs of their connec- tion customers. The regulator introduced the incentive on connections engagement (ICE) into the price control in 2015 to ensure that DNOs are engaging effectively with their customers over new connections. DNOs are required by the incentive to produce plans setting out the actions they intend to carry out to meet their customer's requirements. ENERGY Haven Power slams transmission charges Business electricity supplier Haven Power has insisted that increasing the length of the price control period for electricity transmission has failed to stabi- lise transmission charges. It said in its submission to an Ofgem consultation that the "sizeable jumps" in transmission network use of system tariffs year on year, and the unreli- ability of National Grid's forecast just a year ahead, are a serious problem affecting suppliers' ability to competitively price their contracts. Haven Power requires stable forecast costs because most of its customers opt for 12 or 24-month contracts. Incumbents free to sign up customers Political Agenda Mathew Beech "Policy changes at Decc have 'spooked' investors" The Energy and Climate Change Committee (ECCC) has published a damning report that says pol- icy changes at the Department of Energy and Climate Change (Decc) had "spooked" investors and "raised serious questions" about the government's decar- bonisation plans. ECCC chair Angus MacNeil added that a number of "sudden and unexpected changes to policy" had le those with the money wondering what would be next and making them warier pledge to be "tough on subsidies so that technologies stand on their own two feet". What has not been forthcom- ing is more detail about what the new, and long-term policies are going to be. For example, investors, and industry, are keen to get more detail on the levy Control Framework post-2020. There are plenty of good intentions from Rudd and Decc, but as yet, not much detail on exactly how these will be made a reality. to part with the cash. This obviously touched a nerve at Decc and for energy secretary Amber Rudd, who pre- viously dismissed the notion of investor uncertainty in the sec- tor, telling Utility Week: "I think we have investor confidence." So Decc has launched a coun- terattack to the ECCC report. It has set out the top 10 things it is doing to secure investment in "clean, secure energy", includ- ing plans to reform the capacity market, getting Hinkley Point C built, £500 million for innova- tion, and support for up to 200 heat networks. Rudd's depart- ment has also been eager to reiterate the energy secretary's