Utility Week

UTILITY Week 27th January 2017

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Finance & Investment This week Ministers consider green bank flotation Planned sale to private investors may be blocked to prevent asset stripping Ministers are considering a Stock Market flotation for the Green Investment Bank (GIB) aer a backlash over plans to offload the state-owned bank to private inves- tors, say national press reports. The planned sale of the GIB to Australian bank Macquarie is expected to be scrapped, accord- ing to The Sunday Times. However, a Whitehall official denied in the Financial Times that the sale was about to be aborted, saying a flotation was possible although not imminent. Responding to the speculation about the future of the GIB, the Department for Business, Energy and Industrial Strategy reiterated its previous statement that the sale is a "commercially sensitive process" and that it would be "inappropriate" to comment while the process is ongoing. Earlier this month, former energy minister Greg Barker called for the sale to be halted to prevent "asset stripping", aer reports Macquarie had lined up a series of potential buyers for the bank's most valuable assets. The chair of the Environmental Audit Committee, Mary Creagh, warned against a repeat of the "Royal Mail deba- cle". Peter Aldous, another committee member, has urged the government to retain a 25 per cent stake in the GIB. In October 2016 Macquarie was reported to have become the government's preferred bidder in a proposed GIB privatisation. Climate change think tank E3G and campaign group Greenpeace subsequently said they had uncovered evidence that the GIB had prepared for the sale of assets by establishing a number of new compa- nies under its umbrella. TG ENERGY 'Opaque' finances damage trust Greater financial transparency is necessary if energy suppliers are to win consumer trust and head off radical intervention in the energy retail market, the chair of the Competition and Markets Authority investigation has said. Roger Witcomb said account- ing in the energy sector is both opaque and inconsistent meaning it is hard to gauge the profitability of suppliers. "There is a feeling that we're being overcharged and you can't trust any of them," he said, adding that many big six chief executives had expressed frus- tration that "nobody believes us" when they explained why prices had gone up. "It is impossible to tell from the accounts how much money they are making. They're all on different bases, they all use dif- ferent measures of cost." He noted that one of the CMA's lesser-known remedies is a recommendation to get suppli- ers to report financial informa- tion on a consistent basis. ENERGY Brexit threat to Hinkley Point C Britain's exit from the European Union could put Hinkley Point C over budget and behind sched- ule, EDF has hinted. EDF made its comments in a submission to the Business, Energy and Industrial Strategy (BEIS) select committee ahead of a meeting on 25 January. The company did not mention the project by name but instead referred to "very substantial investments" in new infrastructure which would pro- vide secure, low-carbon power. "Although much of this investment will be sourced from within the UK, we will also be dependent on the import of goods and service and we will need to draw on skilled labour from the EU and globally," EDF said. There could be problems if labour was restricted, it said. ENERGY Align network price control periods Ofgem should move to align the regulatory price control period for energy networks in order to support "whole system" think- ing around energy, a leading academic has urged. "Ofgem is a regulator of both gas and electricity, but the regulatory periods for the gas and electricity networks are out of step with each other," said professor Phil Taylor, head of the Centre for Energy Systems Inte- gration at Newcastle University. He said aligned price controls would allow "joint investment policies" to be shared by gas and power networks. Macquarie is the preferred bidder for the GIB 20 | 27TH JANUARY - 2ND FEBRUARY 2017 | UTILITY WEEK Stock watch 400 350 300 250 DRAX SHARE PRICE, 15 NOVEMBER - 24 JANUARY Nov 2016 Jan 2017 Dec 2016 Drax's acquisition of business supplier Opus Energy for £340 million has significantly reduced its sensitivity to commodity prices, according to investment firm Jefferies. Nevertheless, analysts said optimism regarding the new situation is "overdone". They said Drax shares should be trading at 305p. They were changing hands for around 380p as Utility Week went to press.

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