Utility Week

UTILITY Week 14th July 2017

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UTILITY WEEK | 14TH - 20TH JULY 2017 | 17 This week Networks deny RIIO failure on innovation Energy Networks Association says DNOs have already secured £1bn of savings The Energy Networks Association (ENA) has hit back at claims that the RIIO framework has failed to encourage electricity distribution networks to become innovative. The organisation says distribution network operators (DNOs) have already delivered savings of almost £1 billion through innovation projects. Helen Poulter, a researcher from the University of Exeter, told Utility Week the RIIO framework does not press DNOs to change their business-as-usual approach, so they are able to "keep their investors happy and pro- duce savings for customers by remaining the same". ENA chief executive David Smith said networks are committed to "ensuring that customers benefit signifi- cantly from every pound saved". Poulter also criticised RIIO for failing to prevent DNOs from "gaming the system". She said the regulations do not penalise DNOs sufficiently for failing to have their business plans approved in Ofgem's initial assessment. Networks that get the green light on the first attempt are fast-tracked through the settlement procedure and will be awarded a lower "sharing factor", so they can keep more of any underspend compared to their allowance. Poulter noted that Western Power Distribution – the DNO with the lowest sharing factor and the only one to be fast-tracked – is projected to earn the least over RIIO ED1 – with a £296 million loss on a £423 million overspend. UK Power Networks is expected to generate returns of £492 million – the largest for the six DNOs – but has the highest sharing factor. TG ENERGY Ecotricity in bid for seats on rival's board Green power provider Ecotricity has launched a surprise bid for two seats on the board of rival Good Energy. Good Energy said this week it has received a request for a gen- eral meeting be held to consider the appointment of Ecotricity founder and chief executive, Dale Vince, and the managing director of its electric highway division, Simon Crowfoot, as non-executive directors. According to Good Energy, Ecotricity has become the single largest shareholder in the com- pany over the past 12 months and now owns 25.30 per cent of its issued share capital. Good Energy chairman John Maltby said having the owner and senior management from a direct competitor on the board would be "unworkable". ENERGY No clean growth plan until autumn The long-delayed clean growth plan will not be published until the autumn. The plan, which will set out how the government will meet the emissions reduction targets in the fih carbon budget, was to be published by the Department for Business, Energy and Indus- trial Strategy (BEIS) last year. The uncertainty resulting from its delay has already under- mined investor confidence in low-carbon energy generation, according to green groups. Responding to a question tabled in the House of Commons by Labour MP Jim Cunningham, recently appointed climate change minister Claire Perry stated in a written answer that the plan would be published when Parliament returns from its summer recess in September. Perry promised however, that the plan would be "ambitious" when it materialised. ENERGY Vattenfall plans offshore base Swedish energy company Vat- tenfall has started talks with Peel Ports about creating an offshore wind operations base at Great Yarmouth in Norfolk. The investment in the town's port would create up to 150 highly skilled, long-term windfarm technician jobs, the company said. The base would support two new offshore wind projects that Vattenfall plans to build in the North Sea, each with a proposed capacity of 1.8GW. Vattenfall project manager Ruari Lean said: "We have found Peel Ports to be immensely help- ful and we're confident we will secure the right location at Peel Ports Great Yarmouth." ENA says customers benefit from savings Stock watch SEVERN TRENT SHARE PRICE, FIVE DAY Sep 16 Nov 16 Jan 17 Mar 17 May 17 Jul 17 SEVERN TRENT SHARE PRICE, FULL YEAR The share prices of the three major publicly listed water companies reacted positively to Ofwat's proposed methodology for PR19 (p16). The consultation indicated a reduction in returns compared with PR14, but this was expected. The share prices of United Utilities and Pennon initially increased but returned to just above their opening levels. Severn Trent's share price also increased from 2,200p to 2,230p, but settled around 2,207p as Utility Week went to print. 2240 2600 2220 2200 2180 2400 2160 2200 2140 2000 6 Jul 7 Jul 10 Jul 11 Jul Finance & Investment

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