Utility Week

UTILITY Week 29th September 2017

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UTILITY WEEK | 29TH SEPTEMBER - 5TH OCTOBER 2017 | 7 Policy & Regulation This week Ofwat advice clear on direct procurement Firms should be considering how they will apply the methodology in PR19 plans, says the regulator Ofwat's framework and inten- tions for the use of direct procure- ment for customers (DPC) in PR19 is "clear" and companies should be considering now how they will apply the methodology in their PR19 business plans, a senior director at the regulator has said. Ofwat is yet to finalise its framework for the use of competitive tendering for "dis- crete" projects with a totex value in excess of £100 mil- lion, which are planned for the next regulatory period. But although the final detail for the new procure- ment approach is yet to be settled, David Black, Ofwat's senior director of Water 2020, told Utility Week there is no "excuse" for companies to delay in considering which upcoming projects might viably apply it. He also said Ofwat will be on the lookout for companies that appear to be avoiding use of DPC in their PR19 business plans. "Companies need to show clear workings out," advised Black. While Ofwat accepts there will be some situations in which DPC is not the appropriate deliv- ery vehicle, he added: "We expect companies to really evaluate the use of direct procurement as an option." Utility Week understands that some companies have expressed a nervousness about using DPC because the upfront costs attached to the tendering process are high compared with more traditional procurement methods, and because there is uncertainty about how risk alloca- tion will work in practice. Black insisted, however, that Ofwat has put out "a great deal" of information about how DPC will work and is working closely with companies on perceived issues. JG ENERGY Helm challenged over cost review Energy UK has challenged Professor Dieter Helm by telling him it will "seriously question" his energy cost review if it does not acknowledge that a contin- ued blanket ban on low-cost renewable generation will boost consumers' bills. The industry body sent a ten- point plan in a letter to Helm, who has been appointed by the government to carry out the review, setting out its priorities. This includes developing a delivery plan for post-2020 investment in low-carbon electricity, which Energy UK says should be based on the UK's emission reduction targets out- lined in the fih carbon budget, adopted last year. The letter says this strategy should recognise "the diverse attitudes that exist to a wide range of different and proven technologies across the UK" and should "ensure that the lowest cost large-scale renewables has a route to market". ELECTRICITY Commons launches inquiry into EVs The Commons business, energy and industrial strategy (BEIS) select committee has announced that will launch an inquiry into electric vehicles following the government's pledge to phase out the sale of new diesel and petrol cars and vans by 2040. The committee will investi- gate how the increased uptake of EVs, to meet that target, will affect the electricity grid and how it can manage the impact. The inquiry will draw on writ- ten evidence submitted to the committee for its earlier inquiry into EVs, which was abandoned because of the general election. The deadline for submissions is 4 November. ELECTRICITY Brexit probe begins with civil nuclear The business, energy and indus- trial strategy (BEIS) committee will start a wide-ranging investi- gation into the impact of Brexit on UK industry by focusing on the civil nuclear sector. The committee said its probe into the civil nuclear sector will cover the issues thrown up by the UK government's decision to exit membership of Euratom. The full inquiry will cover issues relating to the impact of trading using World Trade Organization rules, non-tariff barriers, how closely the UK's new regulatory arrangements should mirror existing EU ones, skills, R&D, trade opportunities and transitional arrangements. The deadline for written evi- dence for the civil nuclear sector part of the inquiry is 4 October. Black: no excuse for companies to delay its use Political Agenda David Blackman "Labour is opposed to the existence of utility firms" The Labour Party annual confer- ence was a much happier place this week than when it gathered last year. The party's better than expected performance at this year's general election means its mainstream has swung firmly behind the leadership of Jeremy Corbyn. Shadow chancellor John McDonnell's speech, in which he reaffirmed the party's commit- ment to bringing back utilities into public ownership, shows that the policies outlined in Energy Group outlined its radi- cal proposals to bring offshore wind into public ownership, which McDonnell picked up on in his keynote speech. Energy UK made a bid to reach out to the new zeitgeist within Labour by focusing on vulnerable consumers in its pitch to members at the asso- ciation's own party conference meeting. Whether they like it or not, utilities are going to have to take Labour's radical turn seriously. June's radical platform are now firmly entrenched within Labour. Corporate Britain, including the utility companies, was out in force at this year's conference. For utilities, though, engaging with Labour's current mood is hard given the party's avowed opposition to their very existence. To get a sense of how the tide of opinion is shaping up in the party, it was necessary to leave the plush hotels surrounding the Brighton Conference Centre and take a stroll on the seafront. In a determinedly funky cafe bar with a good view of the off- shore windfarm off the Brighton shoreline, the fledgling Labour

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