Utility Week

UTILITY Week 14th July 2017

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

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UTILITY WEEK | 14TH - 20TH JULY 2017 | 3 This week 4 | Seven days 6 | People & Opinion 8 | Interview Mel Karam, chief executive, Bristol Water 13 Policy & Regulation 13 | News Ofgem launches fresh British Gas probe 14 | Utility Week Energy Summit Balancing supply security, sustainability and affordability 16 | Analysis Key points from Ofwat's draft methodology for PR19 17 Finance & Investment 17 | News Networks deny RIIO failure on innovation 18 Operations & Assets 18 | High viz Listed status for postmodern stormwater pumping station 19 | Pipe up Peter Emery of Electricity North West on the value of apprentices 20 | Market view How the smart meter rollout could help ease the skills shortage 21 | Market view Collecting basic, reliable data in the retail water market 23 Customers 23 | News Most consumers want water choice 24 | Analysis Will Ofgem's price cap mollify disgruntled energy customers? 27 | Market view Community energy schemes are suitable for many European towns 28 | Market view A price cap is a short-term fix for the energy market 30 Community 31 | Disconnector GAS 13 | News Ofgem launches fresh British Gas probe WATER 8 | Interview Mel Karam, chief executive, Bristol Water 18 | High viz Listed postmodern pumping station 21 | Market view Collecting data in the retail water market 23 | News Marston's seeks to supply own water ELECTRICITY 13 | News Capacity market 'should favour low-carbon plant 13 | News MPs to debate Euratom exit ENERGY 13 | News Four MPs vie to chair BEIS committee 17 | News Ecotricity in bid for seats on rival's board 17 | News No clean growth plan until autumn 17 | News Vattenfall plans offshore base 23 | News Most consumers want universal price cap 23 | News Together Energy aims to double customer base 27 | Market view Community energy schemes 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 Leader Ellen Bennett Driving innovation in energy and water Innovation. It's a much overused buzzword these days, but never- theless it is the key concept for utilities as they reshape themselves to face the challenges of the future. It's also much-beloved of economic regulators, who see innovation as a means of companies delivering more for less. Interesting, then, that Ofwat and Ofgem take such different approaches to fostering innovation among once-staid, former public sector monopoly utilities, and realising its benefits for customers. Ofgem's approach is now well established, and extremely suc- cessful. The ring-fenced innovation funding that started life as the Low Carbon Network Fund and transitioned to the Network Innova- tion Allowance and Competition has driven genuine culture change among networks. The findings of the many innovation projects com- pleted to date are significant, and will be key enablers as networks seek to transition to a more flexible, integrated energy system. The obvious, and perhaps the easy, path for Ofwat to take would have been to learn from this success and introduce similar ring- fenced funding for water companies. However, the water regulator's leaders, chairman Jonson Cox and chief executive Cathryn Ross, have made little secret of their scepticism with regard to innovation funding. Other ideas were floated, such as linking the cost of equity to evidence of innovation to create financial rewards, but in the end, they have not materialised. That's not to say Ofwat isn't pushing innovation – it's a key theme of the price review, and a determiner of whether water com- panies will achieve coveted "exceptional" status for their business plans, with the financial and other rewards that entails. The meth- odology rule book has this to say about innovation: "Innovation will be seen in the culture, the processes and the people in the company. It will not be limited to the use of new technology or a new service." So Ofwat is seeking innovation of process as well as physical innovation. It's fair to say that network innovation to date has been focused mainly on engineering solutions that are, by the very nature of the project-based funding, discrete. It's also fair to say that embedding that project-based innovation into business-as-usual is an ongoing challenge for networks – one that Ofwat, by demanding innovation as a core feature of the business plan, will hope to avoid. That said, the water sector is playing catch-up on innovation. Ofgem's funding approach has driven a culture change and created a host of new solutions and approaches that are attracting attention from across the world. It remains to be seen whether Ofwat's more nuanced approach can compete. Ellen Bennett, Editor, ellenbennett@fav-house.com

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