Utility Week

UTILITY Week 22nd April 2016

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UTILITY WEEK | 22ND - 28TH APRIL 2016 | 9 Policy & Regulation This week Grid: creating an ISO will affect investment National Grid tells ECCC an independent system operator would not be in consumers' best interests National Grid has warned against moving to an independ- ent system operator (ISO), saying the necessary market changes will not help investor confidence in the UK energy market. In an evidence session of the Energy and Climate Change Committee (ECCC), National Grid's director of system opera- tion, Phil Sheppard, said National Grid does not believe that the creation of an ISO is in the best interests of consumers "at the moment". Sheppard said a whole ra of market rules would be necessary to incentivise an ISO and deliver value to consumers, based on ISO models elsewhere in the world. Last month it was reported that ministers are con- sidering the possibility of stripping National Grid of its system operator role in favour of an entirely independ- ent body. National Grid is currently working with the Depart- ment of Energy and Climate Change and Ofgem to create greater separation of the system operator role from its other businesses. Sheppard said: "Injecting that sort of uncertainty into the UK market at this point in time seems counter- productive. "If investors are looking for certainty about making investment, and we are trying to increase that certainty, introducing an ISO and consequentially introducing a large ra of market changes in order to make that work effectively does not seem the right timing." But he added: "We are not saying never, but certainly not in the short term or the medium term." LD WATER 'Clear case' for Ofwat to stop using RPI There is a "clear case" for Ofwat to move away from the retail price index (RPI) as the measure of inflation for setting future price controls, utility consul- tancy Oxera has insisted. In an Ofwat-commissioned report, the firm said changing the basis of both the regula- tory capital value and revenue indexation away from RPI would reduce the reliance of regulation on an inflation statistic that is "gradually falling out of use". Oxera said it considers both the consumer price index (CPI) and CPIH (which includes a measure of owner occupiers' housing costs) as "potential candidates" to replace RPI. ELECTRICITY Support for 9GW rise in interconnectors The government has said it sup- ports a 9GW increase in the UK's interconnector capacity, as it published its full response to the Smart Power report released by the National Infrastructure Com- mission (NIC) on 4 March. The report said "more con- nections to cheap, green power supplies, such as Norway and Iceland, could bring great benefits to the UK" and called on the government to "redouble its efforts to open new connections". There are currently four interconnectors between the UK and the rest of Europe, providing around 4GW of capacity. Having previously backed a 5GW increase in interconnector capa city, the government now says 9GW would be "beneficial to consumers" given the evi- dence put forward by the NIC and Ofgem. Last month, Ofgem launched a consultation into three new potential interconnectors: the 1.4GW FAB link between Exeter and Menuel in France; the 1GW IFA 2 between Chilling in Hampshire and Tourbe, also in France; and the 1GW Viking Link connecting Revsing in Denmark and Bicker Fen in Lincolnshire. ENERGY Network innovation is a 'top priority' Energy minister Andrea Leadsom has assured network operators the government is committed to continue support- ing innovation in the future. At a ministerial summit earlier this month, Leadsom said the government is "determined to allow the innovation to hap- pen, there is absolutely no desire to go back to a place where there is no innovation and there's complete discouragement". Energy regulator Ofgem has announced that an in-depth review of the Network Innova- tion Competition and Network Innovation Allowance will be held over the summer to estab- lish whether any "substantive changes" are required. Sheppard: ISO 'does not seem the right timing' SMi presents the 3rd annual conference on... Meter Asset Management Holiday Inn Kensington Forum, London, UK Optimising asset management by preparing for the evolution of the smart meter www.meterassetmanagement.com Register online or fax your registration to +44 (0) 870 9090 712 or call +44 (0) 870 9090 711 UTILITY, ACADEMIC & GROUP DISCOUNTS AVAILABLE @UtilitiesSMi #meterassetmanagement PLUS AN INTERACTIVE HALF-DAY POST-CONFERENCE WORKSHOP 22ND JUNE 2016, HOLIDAY INN KENSINGTON FORUM, LONDON, UK Smart meter asset management through the use of data Workshop Leader: John Cowburn, Owner/Director, Smart Energy Networks BOOK BY 29TH APRIL AND SAVE £300 • BOOK BY 27TH MAY AND SAVE £200 Conference 20 - 21 JUNE 2016

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