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8 | 16TH - 22ND DECEMBER 2016 | UTILITY WEEK The year in review Analysis C ast your mind back to the start of 2016 and the UK and its utility sector had some much-needed stability. We had a Conservative majority govern- ment, preparations were on schedule for the opening of the non-domestic English water retail market, major infrastructure projects were starting to happen, and competition in energy saw independents chipping away at the market share of the big brands. Twelve months on, a lot has changed. The UK is leaving the European Union, we have a new prime minister and Conserva- tive government (read more on p10). The £18 billion Hinkley Point C project was on, then off, before finally being on again. We've seen huge changes in the water sector with major companies exiting the retail market, new companies being created, and mergers taking place. The CMA has revealed its plans to shake up energy retail, and the smart metering programme has stumbled at the first hurdle. The future of independent suppliers has also been called into question with rising whole- sale prices and the collapse of GB Energy Supply. Making waves in water With the non-household water retail mar- ket due to open in April, preparations have ramped up this year as existing companies decided how to take on the challenge. The high-profile exits of three incumbent water companies – Portsmouth Water, Southern Water and Thames Water – stand out. Portsmouth was the first to go, announc- ing its exit at the start of the year. Southern was next, making its announcement on Brexit Day – 24 June 2016 (see box). Its exit was not a huge surprise to the sector. How- ever, Thames Water's declaration the fol- lowing month took the industry by surprise because it had committed resources to par- ticipate in the Scottish market and seemed geared up to compete in England. Scottish retailers Castle Water and Busi- ness Stream bought the business customer bases of the three exiting incumbents (Cas- tle took Portsmouth's and Thames's; Busi- ness Stream took on Southern's business customers). 2016: riding a wave of change As the world tries to digest the tumultous events that have occured during 2016, Mathew Beech looks back at some of the headlines in the world of utilities. Column Ed Kamm The highs and lows of 2016 – a supplier's perspective. F rom an industry perspec- tive, 2016 began with great optimism about the future of the domestic energy market. Sadly it went downhill from there. We hoped that the final report from the Competition and Markets Authority (CMA) would deliver a route to more transpar- ency, fairer pricing and greater customer engagement. However, when the final remedies were need of support. That's why we feel the government needs to intervene now. As things stand, we have pricing that favours the engaged, while the disengaged pay more and are kept in the dark about better deals. The removal of the simpler tariff rules, ostensibly in order to encourage innovation, has created a melee in which incumbency can be played to great advantage and irrational pricing abounds, from both the smallest and largest suppliers. And nothing immediate is being done to address the needs of the long-term disengaged market, which includes many of the UK's most vulnerable customers. announced they were disap- pointing to say the least. Having actively spent the past two years challenging the status quo and championing the need for a simpler, more open, competitive energy market, it is our opinion that the CMA totally missed the mark. We felt at the time that impactful remedies were needed that would fuel a transforma- tion of the energy market to the benefit of all customers. Instead, we are exactly where we were before: with a two-speed market where those who shop around get the best deals, while the majority – some 60 per cent of the UK population – languish on overpriced standard variable tariffs for decades. We won't see greater engagement off the back of the proposed remedies – in fact we strongly believe that we will see less. While the ideal scenario is a market that is competitive, inno- vative and inclusive, the reality is that the energy industry is set to regress rather than progress. And those who will suffer the most are those who are most in