Utility Week

Utility Week 1st December 2017

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

Issue link: https://fhpublishing.uberflip.com/i/909517

Contents of this Issue

Navigation

Page 2 of 31

UTILITY WEEK | 1ST - 7TH DECEMBER 2017 | 3 This week 4 | Seven days 6 Policy & Regulation 6 | News Smart energy to share £725 million strategy fund 7 | View from the top Peter Haigh, managing director, Bristol Energy 8 | Analysis The Budget proves disappointing for utilities 10 | Opinion Interconnectors have a rosy post-Brexit future 11 Finance & Investment 11 | News Severn Trent to sell spare land for homes 14 Operations & Assets 14 | High viz Cambridge Water's Eddington rainwater harvesting system 16 | Market view Collaborative working and water companies 18 | Event The latest from the Utility Week- Wipro Technology and Innovation Council 20 Customers 20 | News 823,000 customers left British Gas in Q3 22 | Analysis Centrica sails into a storm 24 | Analysis The end is nigh for standard variable tariffs 26 | Analysis The race to install SMETS2 28 | Market view CSR is a business issue 30 Community 31 | Disconnector GAS 18 | Event The latest from the Utility Week-Wipro Technology and Innovation Council WATER 11 | News Severn Trent to sell spare land for homes 14 | High viz Cambridge Water's Eddington rainwater harvesting system 16 | Market view Collaborative working and water companies ELECTRICITY 6 | News No new low-carbon levies until 2025 10 | Opinion Interconnectors have a rosy post-Brexit future ENERGY 6 | News Smart energy to share £725 million strategy fund 7 | View from the top Peter Haigh, managing director, Bristol Energy 8 | Analysis The Budget proves disappointing for utilities 20 | News 823,000 customers left British Gas in Q3 22 | Analysis Centrica sails into a storm 24 | Analysis The end is nigh for standard variable tariffs 26 | Analysis The race to install SMETS2 Pitney Bowes: Make self service smarter and more engaging http://bit.ly/2nAa2rC CGI: Demand side flexibility in UK utilities http://bit.ly/2hrMapA Knowledge worth Keeping Visit the DownloaDs section of Utility week's website http://www.utilityweek.co.uk/ downloads The bell tolls for the big six Is it the beginning of the end? As Centrica's share price plummeted this week, industry sages who had long prophesied the demise of yesterday's energy behemoths must have felt vindicated. For years they haves warned that a more radical energy system transition than companies have allowed for, coupled with declining public trust in large institutions, would erode the business models of industry giants to a point where they could come crashing down. Now Centrica seems to have become a living case study for their argument. Nearly £1.4 billion was wiped off the company's stock market valuation following a profit warning, triggered by radically deteriorating margins in its North American business supply arm and the loss of 823,000 customers from its UK domestic retail business, British Gas, in the space of just three months. Furthermore, the recent sharp cut in Centrica's earnings per share is merely a dramatic addendum to a year that has seen its share price fall by almost a third. And other big energy players are suffer- ing similar fates. Over the past five years, EDF, RWE and Eon have all reported declining market value. Of course, these multinational, multi-billion pound organisations are not going down without a fight. They have strategies – broadly centring on the disposal of old generation and E&P assets and the growth of service-based business and smart technology. In Centrica's case, this shi includes the launch of Local Heroes, an online platform for connecting UK consumers with independent tradespeople for household jobs including plumbing, gas and electrical work. More trades will be added soon. The attraction of this kind of enterprise for UK energy suppliers is that compared with the punitively squeezed retail margins of around 3 or 4 per cent in their core businesses, home service provision can offer much higher returns. Home Serve, which snapped up Eon's boiler services business in 2015 and recently confirmed its full acqui- sition of Checkatrade (by far the UK's dominant platform for trade referrals), says home service margins are nearer 20 per cent. This said, energy supplier home services platforms are unlikely to significantly ease painful retail profit gaps. While the margins for service may be higher, gross earnings are tiny compared with the money being raked in from energy bills – especially while standard variable tariffs endure. A transition to service-based enterprise may well enable the survival of our big integrated energy suppliers. But not on the terms they, or shareholders, have been used to. Jane Gray, deputy editor, janegray@fav-house.com Leader Jane Gray

Articles in this issue

Links on this page

Archives of this issue

view archives of Utility Week - Utility Week 1st December 2017