Utility Week

UTILITY Week 7th July 2017

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UTILITY WEEK | 7TH - 13TH JULY 2017 | 3 This week 4 | Seven days 6 | People & Opinion 8 | Interview Helen Gillett, managing director, Affinity for Business 12 | Event All the winners of Utility Week's Stars Awards 2017 14 Policy & Regulation 14 | News Ofgem 'has no power to enforce price cap' 15 | Analysis The UK must bid a fraught farewell to EIB funds after Brexit 16 | Analysis Latest findings of the Future Power System Architecture programme 18 Finance & Investment 18 | News EDF will 'earn' right to build nuclear plant 19 | Analysis Thames under the cosh after lashing from Ofwat 20 Operations & Assets 20 | High viz Fastflow Energy Services gas pipeline contracts 21 | Pipe up Andy Holyland, 3Sun Academy 22 | Analysis Should the deadline for the smart meter rollout be put back? 25 | Market view Utilities must make themselves employers of choice 27 Customers 27 | News Yorkshire Water to sell business retail arm 28 | Market view Utilities can be key players in the interconnected world 30 Community 31 | Disconnector GAS 12 | Event All the winners of Utility Week's Stars Awards 2017 20 | High viz Fastflow Energy Services gas pipeline contracts 25 | Market view Utilities must make themselves employers of choice WATER 8 | Interview Helen Gillett, MD, Affinity for Business 19 | Analysis Thames under the cosh after lashing from Ofwat 27 | News Yorkshire Water to sell business retail arm ELECTRICITY 16 | Analysis Latest findings of the Future Power System Architecture programme 18 | News EDF will 'earn' right to build nuclear plant ENERGY 14 | News Ofgem 'has no power to enforce price cap' 15 | Analysis The UK must bid a fraught farewell to EIB funds after Brexit 22 | Analysis Should the deadline for the smart meter rollout be put back? 28 | Market view Utilities can be key players in the interconnected world CGI: Demand side flexibility in UK utilities http://bit.ly/2qOgC0R GORE: New Arc Rated Foul Weather Protection http://bit.ly/2ot3xrO Knowledge worth Keeping Visit the DownloaDs section of Utility week's website http://www.utilityweek.co.uk/ downloads Ofgem's price cap quandary The popular and political appetite for a price cap seems insatiable. Ofgem's proposal for a safeguard tariff, which would extend the prepayment meter intervention mandated by the CMA, offers a good compromise between acknowledging energy market failings and creating massive unintended consequences via heavy-handed intervention. But it appears the mood for populist power slogans has no room for such rationality. Following publication of the regulator's inten- tions to consult with consumer groups and industry on the detail of a safeguard tariff, a flurry of furious comments splurged into national headlines. MPs from both sides of the House slammed the plan as a "betrayal" of the Conservative manifesto pledge, demand- ing that Greg Clark take the job of market intervention away from Ofgem and legislate for a more assertive price cap instead. The energy secretary has insisted he is ready to do this, though he is no doubt chary given the daunting task of achieving a majority consensus in the Commons – even on this issue of relative political common ground. In the meantime, he has stated that he wants "rapid progress" from Ofgem and has agreed with Labour critics who proclaimed that Ofgem could go "much further" to hamstring the perceived cartel of the big six. He is likely to be disappointed on both counts. At time of writing, Ofgem had set no timescale for its price cap consultation process. At a minimum, however, it will take several months to agree a formula for price regulation with the market, and if Ofgem cannot agree an acceptable approach with suppliers it will take considerably longer – perhaps a year or more. This leads to the second reason why calls for a beefier market intervention are unlikely to be met via Ofgem. As former regulator Stephen Littlechild has warned, the regulator lacks the statutory powers to impose a price cap that does not have supplier backing. By going "much further" Ofgem would risk an appeal to the CMA, which considered and rejected a broad market price cap during its two-year investigation into the market. If the government is convinced that an absolute energy price cap for 17 million UK households is both expedient and desirable, it should take responsibility for delivering it – and sooner rather than later. The industry is not going to tie a noose around its own neck. Jane Gray, Deputy Editor, janegray@fav-house.com Leader Jane Gray

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