Utility Week

UTILITY Week 1st April 2016

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UTILITY WEEK | 1ST - 7TH APRIL 2016 | 13 Policy & Regulation This week Supplier slams early capacity market plan Haven Power says government idea of bringing forward auction could add 7% to customer bills Haven Power has slammed government plans to bring for- ward the next capacity auction, arguing it could cost consumers about 7 per cent of their total bill. The capacity auction in Janu- ary 2017 would provide supple- mental balancing reserve (SBR) and demand-side balancing reserve (DSBR) for delivery in the same year as opposed to 2018/19. Haven Power said energy customers must be made aware of the cost of the plans by the government and other suppliers. The business supplier's chief executive Peter Bennell told Utility Week: "The costs of this [early capacity auc- tion in January 2017] could fall on customers at 6 or 7 per cent of the whole bill. "We are trying to make customers aware of this, get them asking the right questions to avoid them getting a nasty shock. Other suppliers and the government should do the same, because at the moment it doesn't seem like business or domestic customers are very aware." The government last month announced it was consid- ering reforms to the capacity market to "guarantee our long-term energy security", which included the start of the capacity market being brought forward by a year. Energy secretary Amber Rudd said: "The capacity market has driven down costs and secured energy at the lowest possible price for bill-payers, but I'm taking fur- ther action to tackle the legacy of under-investment. By buying more capacity earlier we will protect consumers and businesses from avoidable spikes in energy costs." SJ ELECTRICITY Decc refuses to 'tie Ofgem's hands' The Department of Energy and Climate Change (Decc) has ruled out specifying which model of competitive tendering should be applied to onshore competition for new transmission assets. In an evidence session of the Energy and Climate Change Committee (ECCC) this week, John Fiennes, Decc director, energy strategy, networks and markets, said the proposed legislation will allow "Ofgem to adopt the appropriate, the best answer for the consumer in the particular circumstance. "I would not expect it to be sufficiently firm to say it is early model in all these circumstances and late in those circumstances." ECCC member James Heappey MP asked Decc to confirm that all projects yet to be started could have the early model applied, where the project is opened to competition at the start. But Fiennes said the decision would be le to regulator Ofgem as "we do not believe in tying the regulator's hands. It is an independent body, best placed to take those decisions". WATER Three-year control for NHH retail Ofwat will set a three-year price control for non-household (NHH) retail activities from 2017, aer the proposal received "strong support" from water companies. The regulator said this three-year price control would align with the existing controls for wholesale and household retail, which come to an end on 31 March 2020. This will allow it to monitor how competition is developing in the NHH retail market, and deal with any further cost allocation issues that might emerge between retail and wholesale and/or NHH and household retail. ENERGY Rudd and SSE warn over Brexit Leaving the EU and exiting the internal energy market could cost the UK £500 million or more each year, energy secretary Amber Rudd has said. During a speech in Kent, Rudd said: "If we le the Euro- pean internal market, we'd get a massive electric shock because UK energy costs are likely to rocket by at least half a billion pounds a year – the equivalent of British bills going up by around one and a half million pounds each and every day." On the same day, energy firm SSE warned that a vote for Brexit would increase the risk in its business if there was a prolonged period of legislative or regulatory uncertainty. Bennell: trying to make customers aware Political Agenda Mathew Beech "The first Decc punches over the EU have been thrown" The divisions within the Depart- ment of Energy and Climate Change's (Decc) ministerial team over the EU referendum are beginning to widen. During a visit to the Isle of Grain, Kent to the BritNed inter- connector landing site, energy secretary Amber Rudd made her latest impassioned plea to the British public for the UK to remain within the EU. Britain is "stronger, safer, better off inside the EU" she said. Rudd went on to add that an EU and "paying a Brexit premium to keep the lights on". The energy minister and Out campaigner Andrea Leadsom hit back, accusing the In campaign of "scaremongering". She tweeted that the UK's gas security "is strong" and Brexit is nothing to fear – contradicting Rudd by saying: "I really can't see why bills would go up." The first punches in what will be a tumultuous few months within Decc have now been thrown. exit could cause UK energy costs to rocket by £500 million, and the country to miss out on £12 bil- lion of energy savings brought about by new interconnectors over the next two decades, and further savings of £50 billion a year by 2030 as a result of a fully integrated internal market. She even added that there could be a risk to the UK's energy security as Britain could be "exposed" and potentially find it harder to import gas, and weaken the European stance against Russia using gas as a foreign policy tool. Rudd said the UK risks becoming an EU rule taker, rather than an EU rule maker,

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