Utility Week

24 | 19TH - 25TH JANUARY 2018 | UTILITY WEEK Customers This week Ofgem boss sorry for late action on prices Nolan apologises to vulnerable customers for not tackling energy prices sooner and waives bonus Dermot Nolan has apologised to vulnerable customers for not acting earlier to crack down on energy prices and said he will not be taking a bonus this year. The Ofgem chief executive also told MPs that energy bills could vary by up to £100 aer the introduction of the govern- ment's mooted cap, which he warned suppliers could "game" by offering more expen- sive green tariffs. Giving evidence to the House of Commons BEIS (Business, Energy and Industrial Strategy) committee inquiry into the government's dra bill to cap standard variable tariffs, Nolan apologised for not acting faster to reduce hard-up customers' bills. Responding to a question from Tory MP Antoinette Sandbach, he said: "We have not done as well as we could have." He also admitted that competition was inadequate in the energy supply market. "It's not as effective as it could be yet." Pressed by the committee chair Rachel Reeves, Nolan said he will not receive a bonus this year but defended payouts awarded to his staff. He said that to ensure effective competition in the energy market, a variation of £50 to £100 between the highest and lowest standard tariffs was "acceptable" with the exact level depending on the price of energy. And Nolan warned energy suppliers that Ofgem would fine companies that tried to use the government's proposed exemption on green tariffs to get round the market-wide cap on standard variable tariffs. DB ENERGY Spending watchdog probes meter rollout The National Audit Office (NAO) is investigating the £11 billion smart meter rollout. The study will examine the economic case for the pro- gramme and whether the gov- ernment is on track to meet the target of offering the meters to all households and small busi- nesses in Great Britain by 2020. The latest quarterly figures show 8.6 million smart meters have now been installed out of an expected total of 53 million. Delays to the launch of the central IT system provided by the Data Communications Com- pany means suppliers are only now beginning to install second- generation SMETS2 meters, which have multiple advantages over their predecessors – most importantly interoperability. ELECTRICITY Networks' profits 'cost customers £20' Distribution network opera- tors (DNOs) are making profits "beyond most companies' wildest dreams", the Energy and Climate Intelligence Unit (ECIU) has said in a new report. If networks are as profitable this year, the typical household energy bill will be £20 higher than if their margins were similar to those of the big six suppliers, according to the think tank. The Energy Networks Association has dismissed the report, RIIO Carnival: How New Ofgem Regu- lations are Failing to Hit High Network Company Profits, saying it presents "misleading figures". The research found the six DNOs posted an average profit margin of 30.4 per cent in their first annual results since the introduction of the RIIO ED-1 price control (2015-25). "These businesses are monopolies… and the services they provide are essential – therefore, they are among the lowest-risk investments avail- able," the ECIU says. WATER Bristol Water issues boil water notice Bristol Water issued 7,000 prop- erties with a "boil water notice" on Thursday 11 January aer the discovery of the cryptosporidium bug at its Clevedon treatment works. The notice was lied the following Monday. One test result from the raw water quality samples taken at Clevedon treatment works detected cryptosporidium. The treatment works was taken out of operation and water was supplied from a different works. Bristol supplied bottled water to "vulnerable customers" and contacted schools directly. Compensation of £10 will be paid to all affected customers. Nolan: energy supply competition is inadequate I am the customer Tony Smith "Water companies could start to redress the balance" As we enter 2018, the water industry is confronted with the challenge of improving its legiti- macy in the eyes of consumers and politicians aer a bruising 12 months of public scrutiny. Next month water companies have a golden opportunity to show their intent when they announce their charges schemes for 2018/19. With inflation at its highest for six years, companies can show they are on the side of more than three million house- holds who already tell us their ers. Inflation has been signifi- cant but companies could start to redress the balance. In February we'll be pub- lishing new analysis of water companies' financial perfor- mance in 2016/17 and challeng- ing outperformers to use some of their gains to benefit customers. Financial assistance for customers struggling to pay their bills would be a good place to start. Tony Smith, chief executive, Consumer Council for Water water bills are unaffordable. They can do this by choosing not to take the full increase in charges their price limits and inflation allows. Or they could use some of their extra revenue from increasing bills to boost the availability of social tariff schemes. These schemes are a lifeline for cash-strapped households, but more funding is urgently needed to bolster their reach and impact. One reason the water indus- try finds itself under intense scrutiny is its history of financial outperformance. Large windfalls for company shareholders have come at the expense of higher than necessary bills for custom-

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