Utility Week

UTILITY Week 30th June 2017

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16 | 30TH JUNE - 6TH JULY 2017 | UTILITY WEEK Policy & Regulation "Theresa May is a lame duck prime minister leading a lame duck government." Ian Blackford, SNP Westminster leader Lobby Policy / Budget / Brexit Policy & Regulation Crackdown crumbles The new parliamentary arithmetic was reflected in a barebones Queen's Speech and a loss of impetus for proposed energy price curbs. David Blackman reports. W hat a difference a month makes. On 18 May, the day the Conserva- tives published their election mani- festo, the party had a 9 per cent poll lead and looked set for a landslide election victory. A promised Tory clampdown on energy bills appeared to be only a matter of time. But within days, the manifesto had unrav- elled, followed soon aer by the Tory poll lead, and three weeks later by the election of a hung parliament. The upshot of that uncer- tain result was last week's Queen's Speech, which kicked much of the Conservative man- ifesto into the long grass. One of the relatively few policy promises to survive was the pledge to curb energy bills, thanks to the substantial support that the idea commands across the House of Commons. However, the government is going about the price capping job in a less gung-ho manner than it might have done had prime minister Theresa May secured a strong par- liamentary majority. The government has said it will consult before deciding how it proceeds on energy price curbs, and has yet to make up its mind on whether regulation or fresh legislation is needed. On this issue the key dividing lines are within the Conservative party: free mar- ket Tories versus interventionists such as May, whose hand has been weakened by her failure to win a majority. However, energy secretary Greg Clark has signalled his determination to press ahead with price reform. On the same day as the Queen's Speech, he wrote to Ofgem chief executive Dermot Nolan, spelling out his belief that the regulator has the powers to fix the market. He has asked Nolan for advice on three issues: safeguarding customers on poorest value tariffs, ensuring fair treat- ment for micro businesses, and the future of standard variable tariffs. Clark acknowledges the need for formal consultation, so there will at the very least be a stay of execution for the industry. Ryan Thomson, a partner at energy con- sultancy Baringa, believes that a price curb is unlikely to be introduced for a couple of years, given its potentially grave conse- quences for companies. Former National Grid chief executive Steve Holliday says the consultation offers utilities a window of opportunity to address ministers' concerns about customers locked into excessive tariffs. Thomson says this could give a chance to press the case for more targeted interventions rather than a one-size-fits-all cap. Another way of protect- ing consumers while preserving competition would be to force customers to renew their tariffs annually. Crucially for the industry, a slackening of wholesale price rises may ease pressure to hike tariffs, which would feed through "We want to ensure that we get the best measure in place to deliver what we all want, which is to see people no longer being ripped off by high energy tariffs." Theresa May, prime minister "A threadbare legislative programme from a government who have lost their majority and apparently run out of ideas." Jeremy Corbyn, Labour party leader Photo: Stefan Rousseau/PA Wire/PA Images

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