Utility Week

Utility Week 23 06 17

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UTILITY WEEK | 23RD - 29TH JUNE 2017 | 9 Policy & Regulation This week Thames to work smarter on leakage Water company under fire for missing leakage reduction target by 47 million litres a day Thames Water's chief executive Steve Robertson has admit- ted the company must "work smarter" to reduce leaks. His comments follow the publication of Thames's annual report, in which the company confirmed it has missed its 2016/17 leakage reduction target by 47 million litres a day. The failure earned the company a maximum penalty of £8.6 million from Ofwat and a stinging rebuke from the regulator's chief executive Cathryn Ross "The failure by Thames Water to meet the leakage commitments it has made to its customers is unaccepta- ble," said Ross. Ross's ire was echoed at the Consumer Council for Water, whose chair for London and South East, Sir Tony Redmond, said: "Thames Water's failure to meet its leak- age target sends completely the wrong message to its customers at a time when households are being encour- aged to use water more wisely." Robertson told Utility Week that Thames has "very much taken to heart" the penalty incurred by Ofwat. "We spent more money and worked harder last year to attack leakage than probably we have ever done and the fact is that we didn't get there… we need to be smarter." He explained that leaks will be better identified and targeted through the extensive use of new technologies like drones and satellite data, and improved processes. Robertson also identified that customer-side leakage is a major area of opportunity for Thames. About 30 per cent of the company's leakage occurs on the customer side of its network, including inside customer homes. Robertson said Thames will need to review the way it engages with customers on leakage. JG ENERGY CfD and capacity auctions set back The auction for the second round of the contracts for dif- ference (CfD) subsidy scheme has been delayed until August to give Ofgem time to assess qualification appeals. The process will now move forward along the slowest of five possible paths in the timetable aer the delivery body, National Grid, confirmed that at least one non-qualifying project had sub- mitted an appeal to the regulator in the allowed five-day window. Ofgem expects to complete any assessments by 2 August. The sealed bid window will begin on 14 August, followed by alloca- tion and auditing on 19 August. Applicants will be notified of the outcome on 11 September. Meanwhile, National Grid has announced the timeline for the next set of capacity market auc- tions. The year-ahead (T-1) early auction for delivery in 2018/19 will begin on 18 January 2018. However, the main four-year- ahead (T-4) auction for delivery in 2021/22 will take place almost two months later than usual on 6 February 2018. ENERGY Investors spooked by politicians Politicians have "severely dam- aged" investor confidence in the UK and the energy sector, according to Eon UK's outgoing chief executive Tony Cocker. Speaking at a National Skills Academy for Power conference, Cocker said policy changes, including the decision to remove the levy exemption certificates for renewable schemes, altera- tions to the feed-in tariff regime, and the "unfortunate response" to the Competition and Markets Authority investigation have spooked investors. Brexit and the "unnecessary election and the result" have fur- ther eroded confidence, he said. "The risk premium of investing in the UK has increased, so legis- lators, please go back to consist- ent evidence-based policy, stable policy direction, to drive down that risk premium." ENERGY May told not to U-turn on price cap A leading parliamentary critic of the big six has urged Theresa May to resist pressure to perform a U-turn on her party's mani- festo pledge to cap energy prices. In the wake of the election, the prime minister has report- edly come under pressure from senior Conservatives to drop chunks of the manifesto. John Penrose MP, who co- sponsored a House of Commons debate into rising energy bills before the dissolution of parlia- ment, has written in The Guard- ian that the energy bills pledge was a genuinely popular policy. Penrose has championed a relative price cap that would peg energy bills to within a few per- cent of the lowest in the market. Missing leakage target cost Thames a £8.6m fine Escalating pressures on smart meter installers could compro- mise the safety of consumers and installation engineers dur- ing the national rollout. Jon Turner, UK head of new sales for Siemens' metering business, told Utility Week that high demand for smart meter installers could create quality issues for some meter operators (MOPs), that are responsible for ENERGY Smart meter ramp-up rings installation safety alarms installation and maintenance. Turner said that a "principal challenge" for Siemens in fulfill- ing its smart meter contracts is related to "sourcing, training and retaining the appropriate level of engineering workforce". While Siemens has success- fully attracted a strong work- force, Turner said competition for reliable installers is causing "changing salaries, packages and rewards that are push- ing the price up, ultimately, of labour on install". He also observed "there is a risk" that a scramble to get newly trained engineers into the field could lead some MOPs to suffer installation quality failures including gas leaks and reverse polarity situations. Turner said Siemens has taken action to ensure "rigour" in its training and performance- management procedures. However, some energy sup- pliers may not be aware of qual- ity issues in their installer base and that some MOPs who are "less reputationally concerned" or who are struggling to recruit the engineers they need to deliver contracts, may not crack down on quality issues with suf- ficient discipline.

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