Utility Week

4 | 3RD - 9TH NOVEMBER 2017 | UTILITY WEEK STORY BY NUMBERS Seven days... National media Puerto Rico to scrap energy grid contract Puerto Rico's governor has called for the cancellation of a contract given to a tiny Montana firm to help rebuild the island's power grid. The head of the US-controlled island's power authority said he accepted Ricardo Rossello's recom- mendation and intended to cancel the deal. The contract was given to Whitefish Energy, which has little experience of work on such a scale, without a public bid process. Several inquiries are under way. BBC News, 29 October Dutch offshore wind- farms try to sell direct Energy companies building windfarms off the Dutch coast are negotiating to sell some of their green electricity directly to large companies instead of offering it to the wholesale market, they told Reuters. Developers of offshore wind- farms have traditionally relied on government subsidy payments to guarantee income, but substantial cuts in support mean operators must now find new routes to secur- ing future revenue. Reuters, 30 October Flint poisoned water crisis latest Flint city council has failed to come up with a long-term solution to its water crisis, a judge announced last week, more than three years aer high levels of lead were first recorded in the water supply. US District Judge David Lawson rejected the council's proposal for an extension with the Great Lakes Water Authority. He argued that the two-year extension was not the long-term plan that he had ordered previously and refused a request for more time from the council. The Independent, 28 October Ofgem urges National Grid to rein in balancing costs O fgem has urged National Grid to rein in the costs of balancing the electricity system in its first "State of the Market" report. The publication, which is designed to be the first of an annual series of snapshots, also shows that the big six suppliers would have lost money last year if all customers had been on their fixed price tariffs. The State of the Market report shows National Grid's balancing costs rose last year by £250 mil- lion to £1.15 billion. According to Ofgem's report, available generating capacity was between 1-2GW higher than forecast. It said the rise was largely due to "one-off factors", but partly reflected the challenges of balancing a system with increasingly inflexible genera- tion sources. Rob Perkins, chief economist at Ofgem, said at the report's launch that the regulator hoped the capacity market would "miti- gate some of these costs". "We are paying more than necessary to maintain security of supply. I don't want to suggest we should let the lights go out but we should be thinking of value for money for consum- ers when considering how to approach the issues here." "Consumers are paying for more capacity than we need given that the grid costs of the capacity market are £1 billion per year. This is something we will be monitoring closely." The report also included an analysis of the big six suppliers' profits, which it said were £1 billion in 2016 before tax and interest, equating to 4.5 per cent of turnover. However, all of these profits were made on gas supply, with electricity recording an overall loss. And the regulator estimated that if standard variable tariff (SVT) prices were reduced to provide the same gross profit margin as fixed tariffs, suppliers would have made a 6 per cent loss overall, unless suppliers significantly reduced operating costs. While the six largest suppli- ers made £54 of profit on each dual fuel customer in 2016, the mismatch between average prices for typical SVT and fixed tariff consumers was £180 a year. DB "Nothing is really explored in-depth and the practicalities are skirted over" Former Ofgem senior partner Maxine Frerk on Dieter Helm's review of the cost of energy. See analysis, p11 Seven out of 10 adults are 'switching sceptics' Research by Echo Managed Services found most customers do not believe changing suppliers makes a lasting difference. 58% did not notice a significant financial benefit when switching service provider. 38% of consumers switched energy supplier in the past 12 months compared to 14% of credit card customers. 61% A price increase was the most com- mon reason for people switching. 40% of respondents said they switch as part of a regular check on best deals. 4m Number of elec- tricity customers who have changed supplier this year.

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