Utility Week

UTILITY Week 26th May 2017

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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12 | 26TH MAY - 1ST JUNE 2017 | UTILITY WEEK Policy & Regulation Lobby Policy / Budget / Brexit Policy & Regulation Tough and tougher The two main parties' manifestos reveal an arms race of market intervention in the utilities sector. David Blackman pores over the detail. T he general election manifestos are out. And for the utility sector at least, the outcome of the next election looks like it will be a "Nightmare on Downing Street". The two big parties vying for government have used their manifestos to indulge in an auction on who can crack down hardest on energy companies. Early in her premiership, Theresa May signalled that she had the utilities in her sights. And last week's manifesto confirmed this with a pledge that the Conservatives would "extend" the existing cap on prepay- ment meter bills to "more customers on the poorest value tariffs". For good measure, the Tory manifesto says that micro-businesses would also see their energy bills capped. The clampdown on energy prices is part of a wider land grab by the Conservatives of Labour's traditional political turf, and appears calculated to win over traditional supporters of their opponent who feel alien- ated by the party's recent hard le turn. By planting their flag on Labour territory, first mapped out with Ed Miliband's promise to freeze energy bills at the 2015 general elec- tion, the Tories have dared the opposition to go further. Jeremy Corbyn's Labour has duly obliged by promising to introduce an "immediate" emergency price cap to keep average dual fuel household energy bills below £1,000. The cap would remain in place during what the opposition describes as a "transition to a fairer system". To emphasise its radical credentials, Labour threw in a pledge to return energy grids to public ownership "over time" by allowing the publicly-owned local compa- nies to purchase regional infrastructure. The manifesto also included regaining con- trol of energy supply networks by altering the national and regional network operator licence conditions. Labour's nationalisation plans have le employers "shocked", according to the CBI. The business umbrella body's director- general, Carolyn Fairbairn, says: "Major interventions or structural changes to open markets could have unintended conse- quences, hitting investor confidence and dampening consumer willingness to shop around for the best deal, in the case of the energy market." However, given the Conservative poll lead, the greatest concerns are reserved for the Tory price cap plan, given that it is much more likely to be implemented. Some observers have drawn comfort from the ambiguous phrasing of the price cap policy in the manifesto, with its talk about extending safeguards to "more" customers. This has raised hopes that the govern- ment will not introduce the kind of blanket price intervention that May's recent Sun col- umn indicated was on the cards. And there is no repeat of earlier promises to cut standard variable tariffs by £100. There is also a nod in the manifesto towards the continuing importance of com- petition, which says the government will "It's so important that the industry comes up with a good solution for the government. For those that want more trans- parency and competition in the market, this is a mas- sive opportu- nity." Greg Jackson, chief executive, Octopus Energy POLL TRACKER, 5 - 14 MAY Conservative Labour Lib-Dem Ukip Green source: UKpollingreport.co.uk 60% 50% 40% 30% 20% 10% 0% 05 05 17 06 05 17 07 05 17 08 05 17 09 05 17 10 05 17 11 05 17 12 05 17 13 05 17 14 05 17

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