Utility Week

Utility Week 3rd March 2017

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4 | 3rd - 9th March 2017 | UtILItY WEEK How much will customers pay? according to Ofgem's annual rIIO reports (see analysis p15,) network charges passed on to customer bills in 2017/18 are expected to be: £10 for gas transmission. £118 for gas distribution. £38 for electricity transmission. £86 for electricity distribution. 25% Overall, network charges make up around a quarter of a customer's total energy bill. 17% amount by which network costs have declined since privation. story by NUMbErs Ofgem is allowing network firms to make 'huge' profits Seven days... U K customers are "over- paying" for their energy supply while energy networks make excessive profits, Citizens Advice has said. Responding to the publica- tion last week of annual reports on energy network performance, the consumer charity criticised the level at which Ofgem set the cost of equity for networks. Citizens Advice claimed that a "generous" cost of equity is inappropriately rewarding low risk network companies for delivering business as usual activities. In its RIIO annual reports, Ofgem said energy networks generally made profits of around 10 per cent. Citizens Advice said this was a "huge" amount for regulated, monopoly businesses. In a blog, Citizens Advice senior policy researcher Morgan Wild said: "Ofgem has been too generous in setting the cost of equity, particularly in assum- ing that networks are far riskier investments than they are. "This leads to billions in increased costs. Ofgem should reduce the cost of equity to match actual market condi- tions." Ofgem responded saying it was "determined" to ensure customer got the best deal from energy networks "in terms of service and value for money". The regulator said that the networks were only half way through their price controls, so the returns they report are still forecasts. It also said companies had to share the benefits of any underspend with customers. JG See analysis, p15 "If we get down to 30 to 40% of the market being on SVTs, that is still not OK if all of those customers are the most vulnerable" Gillian Cooper, head of retail energy markets, Citizens Advice (see story, p24) National media Drax has received £1bn in subsidies Taxpayers pumped an extra £548 million into Drax power station last year to fund its controversial prac- tice of burning wood chips instead of coal. The subsidies mean the Yorkshire plant, Britain's biggest single source of carbon dioxide emissions, has reaped £1 billion of taxpayer support over the past two years to burn biomass fuel. Sunday Times, 26 February UK emissions fall just 6% in two decades Britain has cut its greenhouse gas emissions by just 6 per cent in two decades – despite the billions of pounds spent on subsidies for renewable energy and other measures, says a government report. It found that Britain's carbon footprint stands at 1.05 billion tons of CO2 a year. That compares with 1.1 billion tons in 1997, when the UK and other developed nations signed up to the Kyoto Protocol, a global agreement to cut greenhouse gas emissions. The UK's overall emissions rose to an all-time high of 1.3 billion tons of CO2 in 2007 and fell to their current level in the aermath of the 2008 financial crisis. Sunday Times, 26 February Green subsides blamed for high bills Furious peers said green subsidies will make up around a quarter of the typical electricity bill by 2020 – but the public had no idea they were picking up the tab. It came as a cross-party Lords Committee blamed the levies and other disas- trous government interventions for pushing electricity prices sky high. They warned the 58 per cent surge in prices over the past decade was forcing manufacturers to move overseas. They called for an end to most subsidies and the creation of a new Energy Commission . The Sun 23 February

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