Utility Week

UTILITY Week 2nd June 2017

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

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Customers 24 | 2ND - 8TH JUNE 2017 | UTILITY WEEK The Institute of Directors (IoD) has called on the next government to force energy companies to create a transparent default tariff instead of capping prices. In a report published on 27 May, the business group said the tariff should directly show customers how much of their money goes on wholesale energy, transmission and other ENERGY Business leaders propose transparent tariff alternative to price cap fixed costs, and how much on the company's unregulated profit margin. The IoD also wants the next government to organise large auctions when looking for nuclear suppliers to help encourage a UK-based nuclear supply chain, and calls on ministers to put the smart meters programme on hold and review the rollout to date. "Energy bills have become the latest political football, with both Conservative and Labour reaching for interventionist solutions," said the IoD's senior infrastructure adviser, Dan Lewis. "There is clearly a problem, with standard variable tariffs not falling as wholesale prices fell between 2014 and 2016. But cap or freezes don't help competition in the long This week Pennon adds 1,500 business customers South West Water owner capitalises on the opening of the business water retail market Pennon Group's non-household retail arm has secured more than 1,500 net customers since the market opened. The group said its targeting of existing water-only customers with a dual water and wastewater service has been successful and that Pennon Water Services is, so far, one of only three incumbent companies growing, with net customer growth since market opening. Pennon chief executive Chris Loughlin told Utility Week he felt market opening had gone very well so far, and he was glad Pennon was one of the few incumbents in positive territory. In its 2016/17 financial year, Pennon reported a rise in profit before tax of 18.3 per cent to £250 million. The company put the increase down to higher revenues driven by customer demand and cost savings at South West Water, and growth at Viridor, driven by energy recovery facilities, with the waste company achieving EBITDA of £107 million, ahead of its £100m target. Recycling margins improved through 'self-help' initiatives, and £9 million per year in the form of group efficiencies have already been secured, with £17 million per year ultimately expected. Loughlin said: "South West Water's return on regulated equity continues to lead the sector, while Viridor is growing through its energy recovery facility portfolio… We are investing for growth while driving efficiency to keep costs low for the benefit of our customers… Our performance underpins our long- established sector-leading 10-year dividend policy of 4 per cent growth per annum above RPI inflation out to 2020." LV ENERGY District heating in protection spotlight Citizens Advice Scotland has called for households on district heating schemes to be given more consumer protection. The consumer group's report, Different Rules for Different Fuels, identifies a "clear need" for greater protection as district heat is not regulated in Scotland as gas and electricity are. It calls on the Scottish government to introduce statutory protection for billing, metering, standards of service and pricing. It adds there is wide support from suppliers and other stakeholders for more regulation of a sector expected to grow significantly in the coming years. Craig Salter of Citizens Advice Scotland's consumer futures unit said: "We hope that the findings of this project, and the recommendations that have come out of it, will help to ensure that an expansion in the use of district heating in Scotland has the interests of those using it at its heart, and will help to allow it to play a meaningful and proactive role in alleviating fuel poverty." WATER Welsh firm turns to water retail market Aquaflow Utilities has become the latest company to apply to Ofwat for a water supply and sewerage licence, saying it will take a "customer-focused and creative approach" to retail water and wastewater services. In its application, the company said it is "committed to offering eligible businesses in England and Wales exceptional levels of customer service, a highly competitive pricing strategy, and a technology and efficiency-driven approach to reducing water consumption". South Glamorgan-based Aquaflow was incorporated on 3 April 2017. So far, 22 retailers have gained licences. Another four, not counting Aquaflow, have applied for licences and are awaiting a decision. WATER AWB wins £3m Scottish water deals Anglian Water Business has secured £3 million worth of water service contracts in Scotland, including 94 Asda supermarket sites, 20 Knight Frank estate agents, more than 30 Edinburgh Leisure venues, and the Edinburgh and Glasgow offices of Scottish Drug Forum. In 2015, AWB won the contract to provide water billing and efficiency services to 200 public sector organisations at over 15,000 sites in Scotland. AWB managing director Bob Wil- son said: "Our focus on offering competitive pricing and deliv- ering real value to customers through a team of experts and active water management is being recognised by customers as a major point of difference." Dual water/wastewater targeting strategy success term, and we really shouldn't trust politicians to set the price and predict the market response. "The next government will also face several other energy challenges in the next parliament, not least how to cost-effectively build more nuclear power plants, make best use of our shale resources, and encourage more efficient renewable energy."

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