Utility Week

UTILITY Week 22nd July 2016

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UTILITY WEEK | 22ND - 28TH JULY 2016 | 3 Leader Jane Gray This week 4 | Seven days 6 | Interview John Curtin, executive director, flood and coastal risk management, and Harvey Bradshaw, executive director, environment and business, Environment Agency 10 | Topic How structural and technological change is fuelling non-traditional business models in the utility sector 17 Policy & Regulation 17 | News BEIS will take on all of Decc's functions 18 | Lobby What now for the new department tasked with aligning energy, climate change and industrial strategy? 21 Finance & Investment 21 | News Subsidies for Hinkley quintuple to £29.7bn 22 | Market view How would rising interest rates affect utilities? 25 Operations & Assets 25 | Market view The risks of race-related harassment at work in the wake of the Brexit vote 26 Customers 26 | News Domestic water savings will fall short of customer expectations 29 | Market view What services do your customers want, and what they are willing to pay for them? 30 Community 31 | Disconnector Thames Water gets cold feet on competition "If customers could choose, they'd choose Thames." Such was the motto emblazoned on the wall of Thames Water's head office a few short years ago. When the Water Act of 2014 introduced the prospect of competition in the non-domestic water market, the maxim quietly disappeared, but still Thames talked a big game about its aspira- tions for business retail and poured resources into the necessary preparations for market opening. Then, on 18 July, it announced that it would exit the non- domestic market, selling its whole business customer base to Scot- tish retailer Castle Water. The about-turn is sudden and mysterious. Last year, Thames Water Commercial Services was talking about doubling the size of its Scottish customer base by employing an aggressive price strategy to undercut the dominant market player, Business Stream. This year there were rumours that Thames was among the bidders for Southern Water's business customer base, and when Thames announced the successor to chief executive Martin Baggs – Steve Robertson – industry commentators nodded sagely, saying his strong commercial background made him a sound choice for a firm on the brink of broad competition. The reason given by Thames for its exit decision is that it wants to focus on "its core regional household business". But for many, this doesn't wash. There is early speculation that as market opening crept closer, shareholders became nervous about the returns the competitive market will yield. Certainly, the small retail margin, coupled with an uncertain economic climate following the EU referendum, make the security of a traditional utility investment more attractive than ever, and with macquarie's 25 per cent stake in Thames up for sale, projecting suitability is key. Perhaps the writing was on the wall for Thames's non-domestic aspirations when TWCS managing director Graham Southall and Thames head of business retail Rupert Kruger le in April. But with Thames such a big player in an important business region, its deci- sion to exit has come as a shock. Following close on the heels of Southern Water's sale of its business customer book, it sets out an intriguing – some are saying inauspicious – start to market opening in 2017. • In other news, it won't have escaped readers' attention that the new government has scrapped Decc. Our analysis of the move is on p18. Jane Gray, Acting Editor GAS 17 | Political agenda Fracking fan Leadsom appointed environment secretary WATER 17 | News 'Act now to tackle climate change risks' 21 | News Wessex Water pre-tax profits drop £12m 26 | News Poor plumbing to blame for drinking water standard failures 26 | News Business Stream extends House of Fraser deal ELECTRICITY 21 | News Cap and floor 'cuts storage revenue risk' ENERGY 17 | News Ministers appointed to BEIS positions 17 | News EU climate targets are essential for UK 18 | Lobby The new BEIS department has its work cut out 21 | Stock watch Dong Energy's expansion into renewable energy 21 | News Brexit adds £364m to capacity cost 26 | News Welfare reform hits utility customers 29 | Market view Experiments in energy retail services Visit the Downloads section of the website Cisco Intel: Get connected, stay secure http://bit.ly/29qWpZB Citrix: Transforming utilities through connectivity http://bit.ly/29yGg1l Assa Abloy: Solving the key security challenges of critical infrastructure http://bit.ly/29IZ0fp

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