Utility Week

Utility Week 13th October 2017

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

Issue link: https://fhpublishing.uberflip.com/i/885648

Contents of this Issue


Page 5 of 31

6 | 13TH - 19TH OCTOBER 2017 | UTILITY WEEK Policy & Regulation This week Clark doubts any legal challenge over fee cap Draft legislation that will implement government cap on standard variable tariffs set to be published Greg Clark has cast doubt on Ofgem's fear that it would face a legal challenge from energy sup- pliers if it used existing powers to cap energy bills. Speaking on Radio 4's Today programme, the business secre- tary reiterated the government's plans to publish dra legislation that would cap standard variable tariffs (SVTs), which were due to be published this week, aer Utility Week went to press. Ofgem said in August that it would publish proposals for a safeguard cap to protect vulnerable customers but has been reluctant to extend this across the market. Clark said: "Their concern is that if they exercise their powers without legislation they would suffer appeals from energy companies and that it would be knocked down in legal battles. I would be surprised if energy companies wanted to battle through the courts." And he repeated his view that customers would receive more rapid relief from excessive bills if Ofgem used its existing powers to introduce a broader cap. According to a briefing note issued by the Conserva- tive party, the dra bill will give the regulator beefed up but temporary powers. Ofgem will set the level of the cap within the framework of a competitive market and arm's length regulation, which underpins the existing energy supply system. The cap should deliver savings for customers on bad deals while providing them with enough headroom to shop around. The measure is intended to be temporary until smart meters have been rolled out. DB ENERGY Regulator to consult on back-billing Ofgem has confirmed it will consult next month on plans to protect customers from back- billing. The consultation follows an open letter from the regulator in April that outlined a series of proposals, including a 12-month time limit on energy back bills. A voluntary 12-month back- billing limit has been in place since 2007, but the regulator warned that it is "not confident the principle is being applied consistently across the market". "When the principle was introduced, we stated that we would regulate to protect custom- ers if we became aware that the principle was not being applied universally," Ofgem said. Citizens Advice has been calling for the 12-month limit to be a mandatory requirement in suppliers' licences, and would like to see the limit reduced to three months. ENERGY Time to look beyond switching – minister It is time to look beyond promot- ing competition and switching to fix the energy market, according to a government minister. Margot James, BEIS minis- ter, told a fringe meeting at the Conservative party conference last week that policymakers and regulators had become "obsessed" with encouraging customers to switch suppliers, and that it was time to "look at other solutions". She also hinted that less focus on switching would require a change of mindset by regulators. "They have tradi- tionally focused on their role as guarantors of competition but that was on the assumption that competition alone would deliver fairer access to the market and better prices, but that hasn't been as uniform as hoped." ENERGY Ofgem reopens its 'regulatory sandbox' Ofgem has opened the second round of its "regulatory sand- box" that lets businesses test innovative products and services without facing the full gamut of energy market regulations. The regulator said its experi- ences of trialling the scheme since first inviting expressions of interest in February had been "extremely valuable". Ofgem is in the final stages of talks with five innovators that wish to access the scheme. They include a consortium led by EDF Energy, which is trialling a peer-to-peer local energy trad- ing platform, and Ovo Energy, which is testing a new energy tariff supported by smart home technology. Clark: suppliers don't want to go to court The market for new appoint- ments and variations (NAVs) is not reaching its full potential to "deliver significant benefits", according to a study published by Ofwat this week. It has identified a number of "potential barriers" faced by NAVs looking to participate in the market, including issues relating to the process of creat- ing a new appointment; the behavioural practices of incum- bents; and pricing. The study, which drew on WATER Ofwat tackles competition for new appointments and variations published information and engagement with stakeholders, found the market "may have some way to go" before it deliv- ers real benefits for developers, end customers and society. Ofwat suggests the NAV mar- ket has the potential to enable sites to be served at a lower cost, facilitate multi-utility developer services and encourage innova- tion in the way water services are provided, but it is not cur- rently working as effectively as it could. The regulator said it commis- sioned the study to investigate how the market was working and to consider the extent to which any factors currently "act to prevent, restrict, or distort" the market from achieving its full potential. Based on the study's find- ings, Ofwat has outlined actions to address the concerns raised. These include: • reviewing policies and processes to minimise regulatory and administrative barriers; • consulting on changes to rules on new connection charg- ing and on updating guidance on bulk supply charging; • challenging the water sector to improve access to information and the delivery of services to NAVs. The NAV regime has been in place in England and Wales since the 1990s. It enables a company to apply to Ofwat to replace the incumbent as the provider of water or wastewater services for a specific site.

Articles in this issue

Archives of this issue

view archives of Utility Week - Utility Week 13th October 2017