Utility Week

UTILITY WEEK | 19TH - 25TH JANUARY 2018 | 11 Policy & Regulation This week Water companies face tax crackdown Environment secretary considers new powers for Ofwat to tackle offshore tax arrangements Environment secretary Michael Gove has threatened to legislate against water companies over their use of offshore tax arrange- ments unless they start to behave in a "responsible fashion". In an interview with The Sunday Times, Gove signalled he would support Ofwat's chairman Jonson Cox to act and would give him "new legal powers", if necessary. "The regulator has a responsibility to safeguard the public interest. If he needs more, I'll do everything possible to back him up." Gove called for a crackdown on water company bosses using offshore tax havens while cashing in on their monopoly position. He said privatised utility com- panies must meet "high ethical standards" to maintain public support. In the interview, Gove said he had talked to Cox about "the corporate practices" of some companies. "I don't think it's right that privatised utilities, which have a nat- ural monopoly, should use offshore tax structures which have rightly come under criticism from the public." He added: "Water companies have a responsibility not just to play their part in making sure we're ready for floods but also to behave in a responsible fashion." The legitimacy of the water sector was called into question several times in 2017 and the Labour party outlined plans to renationalise the industry. Last year, Yorkshire Water and Thames Water vowed to close their Cayman Island subsidiaries, with Yorkshire promising further action to reduce borrowing, simplify its finances and enhance service for customers. KP ELECTRICITY Post-Brexit nuclear safeguards pledge The government wants nuclear safeguarding to be included in the UK's post-Brexit transition arrangements, Greg Clark has announced. The business and energy secretary updated Parliament on progress on Britain's withdrawal from Euratom – the Europe-wide treaty that governs the safe- guarding of nuclear materials and labour – in 2019. Clark's statement included a pledge that the prime minis- ter's proposed implementation period, during which existing trading arrangements and security measures will be main- tained, would cover Euratom. Clark also said the govern- ment will listen to the nuclear industry when shaping its new immigration regime. ELECTRICITY Three links approved under cap and floor Ofgem has given the green light for three new interconnectors to operate under the cap and floor regime, confirming its minded-to decision announced in June. The regulator is convinced that the subsea links to France, Germany and Norway will ben- efit consumers in Great Britain. The cap and floor regime places minimum and maximum limits on the revenues inter- connectors can generate. Any interconnector that fails to earn enough will be topped up to the floor by the system operator National Grid. National Grid will conversely be entitled to any revenues that exceed the cap. Aer a consultation, Ofgem has granted approval in princi- ple for the Grid Link (to France), Neu Connect (to Germany) and North Connect (to Norway) to operate under the regime, sub- ject to conditions. ENERGY Ineos challenges fracking freeze Ineos has launched a court challenge to the Scottish govern- ment's moratorium on fracking north of the border. The petrochemical firm's fracking arm, Ineos Shale, is seeking a judicial review of an "effective ban" by Holyrood on onshore unconventional oil and gas development in Scotland. Last October the Scottish gov- ernment declared an indefinite extension to the moratorium on fracking announced in 2015. The moratorium has been endorsed by the Scottish Parliament. Ineos has lodged a petition for judicial review on the grounds that there were "serious errors" in the decision-making process, including a failure to adhere to proper statutory process and a misuse of ministerial power. Water firms must meet 'high ethical standards' Political Agenda David Blackman "Energy and climate change are back at the cabinet table" What's in a name? Quite a bit if you are Theresa May it seems. Last week's cabinet reshuffle saw the prime minister change nearly as many departmental titles as personnel. Jeremy Hunt now glories in the expanded title of secretary of state for health and social care. The change is clearly designed to send a message that the Conservatives care about the issue, one of the many weak spots exposed in the Tory armoury during last year's general election campaign. The Conservatives have a lot of ground to make up aer David Cameron embraced the environ- ment early in his leadership only to reportedly decry "green crap" when he was in government. Parliament's Climate Change Committee has praised the gov- ernment's green ambitions but said work was needed to trans- late them into action. The PM must do more than visit a bird sanctuary to avoid being seen as all spin and no substance on the environment. Claire Perry's elevation to attend the cabinet in her capac- ity of minister of state for climate change can be read in a similar light. The environment counts as the top issue among 18-24 year- olds who turned out in droves for Labour, according to research by the Conservative thinktank Bright Blue. It's welcome that energy and climate change are back at the cabinet table two years aer the prime minister dismembered Decc as one of her first acts in Number 10. The danger is that the move will be seen as window dressing designed to distract attention from a lack of underlying action.

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