Utility Week

UTILITY Week 2nd September 2016

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UTILITY WEEK | 2ND - 8TH SEPTEMBER 2016 | 9 Policy & Regulation This week Review slashes Grid spending by £185.4m Ofgem says electricity and gas projects worth nearly £200m are no longer required Ofgem has proposed cutting National Grid's transmission spending allowance for the cur- rent price control period by £185.4 million. The cuts, which will impact National Grid's gas and electric- ity transmission businesses, come off the back of a mid-period review of spending for the period 2013-21 launched in May this year. Aer investigation, Ofgem decided that National Grid no longer needed to undertake its planned gas pipeline project at Avonmouth and so wants to cut its gas trans- mission spending allowance by £168.8 million. In electricity transmission, Ofgem found that a range of planned fault protection work was no longer required, because of fewer-than-expected generators connecting to the high-voltage grid. The regulator therefore proposes to cut spending in this areas by £38.1 million. In addition to the cuts, Ofgem's mid-period review is set to award some additional spending allowance to National Gird. The regulator has proposed allocating an extra £21.5 million for projects relating to system plan- ning and the new challenges for the high-voltage grid arising from growing balancing pressures. Overall, the cuts and the proposed additional spend- ing allowance amount to a reduction of £185.4 million for National Grid. In response, National Grid issued an official state- ment saying that the "narrow" mid-period review made no difference to the "key financial parameters of the [reg- ulatory] framework" – a fact which it welcomed. JG WATER Tackle microplastics, MPs tell water firms MPs have urged water compa- nies to work with the govern- ment and the Environment Agency to help find solutions to microplastic pollution (see Politi- cal Agenda, below). Prevention at source, by reducing the number of micro- plastics flushed into the oceans, is the "most viable" option, according to the Environmental Audit Committee (EAC). However, in a report MPs insisted that microplastics could also be captured through effective waste and water sew- age treatment processes, which "currently do not require the monitoring of microplastics". "We recognise the heavy investment needed in this area, and that there is difficulty in filtering microplastics," the EAC concluded. "Therefore, we recommend that the govern- ment and Environment Agency work with water companies to understand what feasible options there are to monitor and ultimately reduce microplastic pollution." ELECTRICITY CPS will become irrelevant after 2025 The government's plans to close all unabated coal-fired genera- tion by 2025 means the carbon price support (CPS) will eventu- ally become irrelevant, analysis by Aurora Energy Research has found. Scrapping the scheme follow- ing the phase out could actually lead to an overall reduction in carbon emissions. "The CPS was designed to reduce emissions by encourag- ing coal-to-gas switching," said Aurora. "With coal mandated to close, that objective loses relevance." The mechanism also causes "economic distortions" by creat- ing an "uneven playing field" between combined cycle gas turbines (CCGT) plants in the UK and imported power from Europe. ELECTRICITY CfD auction delayed until 2017 The next contracts for difference (CfD) auction has been delayed until early 2017, the Financial Times has reported. Former energy secretary Amber Rudd had previously said it would take place towards the end of this year. The merging of the business and energy departments into the Department for Business, Energy and Industrial Strategy (BEIS) and the August summer holiday break are to blame for the delay, the paper was told by an unnamed source "with knowl- edge of the auction timetable". Gas: spending down by £170m Political Agenda Mathew Beech "Microplastics are a whole new problem for water" During the past few weeks, water companies' attention has been firmly on ensuring they are able to meet the soaring summer demand and efficiently remove wastewater and treat it to their impeccably high standards. On top of this, the Environ- mental Audit Committee (EAC) stated that there is another prob- lem that needs urgent action: microplastics. The significance of this prob- lem comes when it is predicted that by 2050 there will be more He said: "If there are issues that we should build into the pricing plans that Ofwat is look- ing at in the future, we can do that, if it can be done in a cost- effective way." That challenge will come down to the water companies to remove the microplastics, protect our oceans, and keep bills for consumers down. They, along with many others, will be hoping that the microplastic ban can be agreed, and agreed quickly. plastic than fish in the world's oceans. To tackle this, the EAC has called for a ban on all micro- plastics. However, this could prove difficult to introduce and enforce, while the plastic contin- ues to enter the seas. MPs from the committee have urged the water companies to work with the Environment Agency and the government to find a viable solution. Environment minister George Eustice said that the ideal way would be to prevent these micro- plastics being used, but sug- gested that if this could not be achieved, the water companies could be requested to step up.

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