Utility Week

UTILITY Week 18th November 2016

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Page 7 of 31

The Topic: Competition COMPETITION THE TOPIC 8 | 18TH - 24TH NOVEMBER 2016 | UTILITY WEEK British Gas EDF Eon RWE Npower Scottish Power SSE Extra Energy First utility Ovo Utilita Utility Warehouse Others ELECTRICTY SUPPLY MARKET SHARE BY COMPANY, DOMESTIC T he 45th president of the US may be stealing all the headlines today, but it's the words of the 31st which struck a chord with Utility Week as it compiled this Topic feature. President Herbert Hoover said: "Competition is not only the basis of protection to the con- sumer, but is the incentive to progress." With competitive markets opening and growing in the UK utilities sector, competi- tion is taking hold like never before. It also remains a topic of ongoing and fierce politi- cal debate. In the energy sector, there are over 50 retail suppliers, more than ever before, yet there are still claims that the market is flawed and failing its customers. The generation market is open to more types and a wider breadth of technologies than ever before, yet large-scale thermal plants, in particular nuclear and gas, seem to be dominating, despite the progress being made in storage and other innovative solutions. The networks too are facing the ingress of competition, in distribution level con- nections and services businesses, but also via Oo (offshore transmission) and Cato (onshore) regimes for the transmission system. Competition is also about to take hold in the water sector, with non-household com- Competitiveness is the gold standard for utilities now petition scheduled to go live in April, and seemingly set to extend into the domestic sector as well. The wholesale side of the industry is another area where competitive forces are tentatively kicking in, and these are only set to get stronger with a regulator keen on deregulation. In the final Topic of 2016, Utility Week examines the competitive forces that are cur- rently impacting on the energy and water sectors, and looks at those which could come into play in the near future. Competition in the energy sector has seen the market share of the big six incumbent suppliers begin to shrink. Independent suppliers, the largest of which include First Utility and Ovo Energy, currently have 14 per cent of the electricity retail sector. This has grown from only 1 per cent as recently as the middle of 2010, as the independents have typically undercut the retail offerings of their larger rivals. THE DEVELOPMENT OF ENERGY COMPETITION Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 25% 20% 15% 10% 5% 0% Source: Ofgem

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