Utility Week

UTILITY WEEK | 17TH - 23RD NOVEMBER 2017 | 7 Policy & Regulation This week Five water companies fail on financial plans Looking ahead to 2020 'doesn't qualify as long-term planning', the regulator warns Ofwat has named five water com- panies that have failed to deliver long-term plans to prove they are financially resilient. Thames Water, Severn Trent, Bristol Water, Dee Valley and SES Water have all only looked forward "as far as the end of the current control period", the regulator said. Ofwat expects all water companies to include a long- term viability statement in their annual report to confirm they are financially viable over the longer term. In the regulator's second annual Monitoring Financial Resilience report published last week, it revealed the statements for the five companies only stretch to 2020. It stressed the current price control period should not be a "constraint" and acknowledged some companies have reviewed longer-term business plans. But the regulator has warned water companies must do more to plan for their long-term financial resilience to deal with the challenges they face now and in the future. The regulator said it has compiled information about all water companies as part of its efforts to "boost transparency" about the water sector's financial arrangements. Last year, it challenged companies that had only used three or four years in their long-term viability statements to look at periods of at least five years in the future. Speaking at the publication of the report, Ofwat senior director Aileen Armstrong said: "Looking ahead to 2020 doesn't qualify as long-term planning for busi- nesses whose assets last hundreds of years." KP ELECTRICITY UK 'overweight' risk with offshore wind Offshore wind should be excluded from the testbed pot of renewable energy subsidy auctions, according to a former government adviser. Gareth Miller, chief execu- tive of Cornwall Insight, told a Westminster Forum conference that offshore wind had been a "tremendous success story" but he questioned whether it should continue to be counted as a "less established" renewable technol- ogy in the contracts for differ- ence (CfD) auction process. Miller, who advised the Department of Energy and Climate Change on investment, said the "world has clearly moved on" since the technology was designated, highlighting the £57.50 per megawatt hour (MW/h) cleared by offshore wind projects in the latest CfD auction. He argued the scale of off- shore wind projects meant one or two projects could hoover up the bulk of CfD budget alloca- tions. "We are at a very great risk of going very overweight on offshore wind," Miller said. ENERGY Smart meters inter- operable in a year First-generation smart meters should be fully inter-operable in about a year, enabling easy switching between suppliers, according to energy minister Richard Harrington. Customers with a SMETS1 meter will be able to access so- ware so they can upgrade their devices, business and energy sec- retary of state Greg Clark told the House of Commons last month. Harrington told the Com- mons last week: "The SMETS2 programme involves complete compatibility between all the different meters, enabling peo- ple to switch. The current system that is being installed, SMETS1, will be applicable for that in, we think, about a year, when the soware allows that to happen." ELECTRICITY Diesel fuelled 1% of auction generation Diesel plants made up just 1 per cent of the generation procured through last winter's capacity market auction, the energy minister has told Parliament. In a written answer published last week, Richard Harrington said in the 2016/17 winter capa- city market auctions, just over 1 per cent of the total generation secured received its primary fuel from diesel. Responding to a question tabled by Mary Creagh, chair of the Commons environmental audit select committee, he said 702MW and 724MW of diesel units were secured in the 2016/17 T4 and early auctions respectively. Stack up? Five firms' plans too short term to tell Political Agenda David Blackman "The budget will be watched more closely than usual" It may be easy to forget, amid the resignations and turmoil of the past fortnight, but the biggest setpiece event of the autumnal Parliamentary calen- dar hasn't even happened yet. Wednesday 22 November sees the Budget, which this year brings together tax and spend- ing in a single statement for the first time since the 1990s. Budgets are always high- profile events, but this year's will be watched even more closely than usual. It won't just be the The CGS also said the Budget will detail a new carbon pricing regime. But it was less definite on the timing of a post-2020/21 replacement regime for the Levy Control Framework, which it said was due "later this year", prompt- ing suspicions the new controls will not emerge on the 22nd. But time is already tight for energy firms planning capital investment for the beginning of the next decade: any further slip- page poses risks to the govern- ment's decarbonisation drive. opposition that will be looking for opportunities on Budget day to trip up Philip Hammond, who is under pressure on all sides fol- lowing his unlikely emergence as the Cabinet's leading champion of a so Brexit. The government will be hoping to start sketching a more positive narrative about the UK's post-EU withdrawal economic future. A key element of this will be the long-awaited industrial strategy white paper, which should maintain momentum on the strong decarbonisation push outlined in last month's Clean Growth Strategy (CGS). But industry needs hard details as well as warm words.

• Cover