Utility Week

UTILITY WEEK | 23rd - 29Th SEpTEmbEr 2016 | 9 Policy & Regulation The original objectives of the UK's competitive energy market structure are at risk from the growth of distributed resources such as solar and storage, unless rules are changed to allow distri- bution network operators (DNOs) to play a more active role. Consultancy Navigant's global head of energy, Jan Vrins, warned energy regulators to take a "hard look" at market EnErgY Distributed resources 'put competitive market objectives at risk' structures because "the last thing you want is for all this new tech- nology to lead to higher prices, lower reliability and a significant challenge on society around the large number of stranded assets". Vrins said DNOs are in the best position to get the "full value" out of distributed resources, but many regulators are only "tweak- ing" the framework to incorporate solar and storage. Instead, regulators need to "design a new regulatory frame- work that is geared towards a much more distributed cleaner grid infrastructure". DNOs are currently prevented from owning storage assets because they are categorised as generation. The government told the Energy and Climate Change Committee in April it is open to creating a separate licence cat- This week Competition could save households £3bn Ofwat says benefits of opening residential retail water market could be £2.9 billion over 30 years The financial benefits from opening the residential retail water market to competition could be worth almost £3 billion over 30 years. On Monday Ofwat released the final findings from its cost- benefit review of competition in the domestic market that it had been requested to undertake by the government. The report suggested the benefits could be worth as much as £2.9 billion over 30 years, which amounts to £8 per customer per year. This is a slight increase on its predicted savings of £2.3 billion (£6 per customer) laid out in its emerging findings in July. In its assessment, the regulator outlined four poten- tial scenarios that could arise following the opening of the household retail market. Higher costs, little innova- tion and weak competitive activity set out in scenario four would result in a negative net present value of -£1.4 billion (£3 per customer per year). Ofwat has now submitted its final assessment to the government. It is for the government to decide whether, in principle, it wants to introduce competition and, if so, how and when to do so. Ofwat chief executive Cathryn Ross said: "Custom- ers tell us they think they should have the freedom to choose and don't understand why water is the only retail market in which there isn't some form of competition. "But, of course, this isn't a one-way street. There are significant costs to be considered, and it will be important to ensure that customers are treated fairly in a competitive market and that vulnerable customers are protected. The decision for the government to make is whether the potential benefits outweigh the costs and risks." LV EnErgY ECCC committee to disband in October The Energy and Climate Change Committee (ECCC) is to be dis- banded on 17 October. Responsibility for scrutinising energy and climate change policy will fall to what is currently the Business, Innovation and Skills Committee. It will be renamed the Business, Energy and Indus- trial Strategy Committee. "Over the next few weeks we look forward to continuing our work with stakeholders to bring our current work programme to a conclusion," tweeted ECCC. The change follows the gov- ernment's decision in mid-July to scrap the Department of Energy and Climate Change and fold it into what was the Department for Business, Innovation and Skills (Bis) – now called the Department for Business, Energy and Industrial Strategy. Labour MP for Hartlepool and former shadow business minister Iain Wright will chair the revamped committee. ELEcTrIcITY Five make Burbo Bank Ofto shortlist Ofgem has released a shortlist of five bidders competing to own and run the £230 million trans- mission link to the Burbo Bank Extension windfarm off the coast of Liverpool. The five are Balfour Beatty Equitix Consortium, Dalmore Capital, Diamond Transmission Partners, Mari Energy Transmis- sion, and Transmission Capital Partners. Ofgem said the shortlist shows there is "strong competi- tion" to be the offshore transmis- sion owner (O£o) of the link, which will provide a guaranteed revenue stream for 20 years. Competitive tendering has cut the cost of connecting offshore windfarms by at least £700 million since 2009. Competition will be extended to onshore transmission assets in 2017. Ofgem will announce the preferred bidder in April 2017. pan-UTILITY Old whistleblowing policies of concern A whistleblowing expert has warned that many utilities have out of date whistleblowing infor- mation for staff, which could leave them vulnerable. International whistleblowing expert Wendy Addison told Utility Week's HR Forum in Birmingham that a review of a wide selection of utility company websites and financial reports showed that many are hosting outdated employee information about the process of invoking whistleblowing law. "The problem with this is that if your whistleblowing informa- tion for your organisation isn't up to date and you have an employee that decides to blow the whistle externally – to the regulator for example, or to the media or their MP – the law is on the side of the whistleblower." Glass full: each customer could save £8/year egory in the future, but will not make the change immediately. In contrast, regulator Ofgem essentially ruled out creating a new licence so a competitive market can develop. Vrins said this approach risks more stranded assets "than we have seen in the history of mankind" and urged utilities to present their "very strong busi- ness case" to regulators.

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