Utility Week

UTILITY WEEK | 19TH - 25TH JANUARY 2018 | 3 This week 4 | Seven days 6 | Interview Tanya Sephton, managing director, South East Water Choice and Water Choice 11 Policy & Regulation 11 | News Water companies face tax crackdown 12 | Market view Data protection rules offer a chance to overhaul outdated systems 13 | Analysis Will Brighter World Energy be the last energy supplier to fall victim to 'market pressures'? 14 | Analysis Plans to get all unabated coal generation off the system by 2025 16 | Market view Price caps will stifle innovation 17 Finance & Investment 17 | News Wales offers to help pay for tidal lagoon 18 | Market view What are the implications for the energy sector of the revelations in the Paradise Papers? 19 | Analysis The Shell-First Utility tie-up 22 Operations & Assets 22 | High viz Davyhulme plant gets an upgrade 24 Customers 24 | News Ofgem boss sorry for late action on prices 25 | Market view Make your business customer-centric 27 | Market view What's next for British Gas? 28 | Market view Meet the Grid Runaways 30 Community 31 | Disconnector GAS 12 | Market view Tighter EU data protection rules 25 | Market view Customer focus WATER 6 | Interview Tanya Sephton of South East Water Choice and Water Choice 17 | News UU to pump £60m into Ellesmere Port 22 | High viz Davyhulme wastewater treatment plant ELECTRICITY 11 | News Post- Brexit nuclear safeguards pledge 11 | News Three links approved under cap and floor 17 | News BESS secures £28.5m for battery portfolio 24 | News Networks' profits 'cost £20' ENERGY 11 | News Ineos challenges fracking freeze 13 | Analysis Brighter World Energy exits the market 14 | Analysis Coal phase-out 16 | Market view Energy price caps 17 | News Strong winds drive earnings at Orsted 18 | Market view The Paradise Papers and energy 24 | News Watchdog probes meter rollout 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 Energy is still the land of the giants You've got to be strong to win at the energy retail game. And just now, it looks like strong means big. In 2014 Labour famously predicted the demise of the big six in favour of the "big six thousand", envisaging an energy retail indus- try characterised by small to mid-sized, nimble suppliers, each with their own niche offering for a different customer demographic. To some extent, the intervening years have shown progress towards this vision. The number of independents active in the mar- ket has swelled to more than 50 and applications to Ofgem for gas and electricity supply licences continue to flood in. But bright-eyed newbies clamouring for a slice of the energy pie should beware. In December 2016, GB Energy Supply fulfilled analyst prophe- cies that a supplier failure was imminent. Unable to hedge against volatile wholesale prices and bound to an aggressively competitive pricing strategy for fixed price deals, it crashed out. Then, this December, Brighter World Energy met a similar fate for different reasons. The socially motivated white label supplier admitted it had failed to anticipate the growth in competition from independents, and found its business model constraining its ability to respond to demand for new tariff structures and energy services. It's possible these two failures mark the slow start to a wider shakeout that will see companies that lack either scale or robust strategies exposed. Next in frame may be Toto Energy, Flow Energy and Spark Energy, which have all exhibited worrying signals to those with an eye on supplier form (see analysis, p13). Meanwhile, Ofgem has promised to deliver new stress tests that will make it harder for entrepreneurs to simply "have a go" at energy supply without truly understanding the rigours of the market. Could this mean the end of independent supplier growth? Their outlook certainly looks tough, especially in the shadow of manoeu- vres from bigger beasts like SSE and Npower, whose mega-merger will consolidate two big six customer blocks, and First Utility, which has submitted to become a cog in the Shell machine in return for greater clout. The little guys may protest that a consumer penchant for localism and widespread mistrust of institutions still leave them with plenty to play for. But for now, it looks like energy supply is still a land of giants, pestered at the ankles by their tiny cousins. Jane Gray, deputy editor, janegray@fav-house.com Leader Jane Gray

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