Utility Week

6 | 2ND - 8TH FEBRUARY 2018 | UTILITY WEEK Policy & Regulation This week Brexit 'will threaten UK's energy security' Lords committee calls on ministers to outline how future cross-continent energy trade will work The UK may be more vulner- able to energy supply shortages post-Brexit while consumers face higher bills, a House of Lords committee has warned. The Lords EU energy and environment sub-committee, in a report published on 29 January on Brexit and energy security, expressed concern the UK may be more vulnerable to supply shortages in the event of extreme weather or unplanned generation outages. It calls on ministers to outline how the UK will work with the EU to anticipate and manage cross-continent supply shortages. The committee also concludes the UK's withdrawal from the EU is "likely" to lead to less efficient energy trade, which could in turn push up the price consumers must pay to ensure security of supply. The peers urge ministers to assess and take steps to mitigate the impact that leaving the internal energy mar- ket (IEM) would have on consumers' bills, particularly those living in financially vulnerable households. The committee urges the government to seek contin- ued participation in the IEM but if this is not possible to clarify the extent to which the UK must comply with EU energy, environment and competition legislation to maintain its trading energy arrangements with other member states. This includes clarifying "as soon as possible" the regulatory regime that will apply to UK-EU interconnec- tors post-Brexit, to support the development of future facilities. DB WATER Ofwat to 'spark' innovation Ofwat plans to lead by example with its drive for innovation in the water sector with the launch of a digital campaign titled Spark! The campaign will feature a series of videos encour- aging water companies to "fully embrace" innovation. Going live on 6 February, Ofwat's digital channel will run two programmes a week over four weeks, with each week focusing on a theme around innovation. These will be: highlight- ing the "tangible benefits" of innovation for companies and their customers; looking at how to create a culture that "nour- ishes innovation" and creative thinking; exploring the benefits of collaborating with others; and discussing how the water sector can keep pace in a "rap- idly changing and increasingly dynamic world". This campaign complements other work Ofwat is doing around innovation, which is a main theme of PR19. ELECTRICITY Interconnector given the go-ahead A new electricity interconnector between Northern Ireland and the Republic has been approved – ending a near decade-long planning battle over the project. The Northern Ireland Depart- ment for Infrastructure has given consent for the £200 million project, which straddles the bor- der between Cavan and Tyrone. It involves construction of a new 275/400kV substation in County Tyrone and 34km of 400kV overhead line from there to a point on the Armagh-Monaghan border. The scheme was first proposed in 2009, but the construction of 102 pylons sparked opposition. ELECTRICITY Injunction to halt benefits cut is denied The High Court has denied a request by a group of peaking plant developers for an injunc- tion to halt plans by Ofgem to drastically reduce triad avoid- ance payments. The regulator has welcomed the ruling, saying the year delay sought by the claimants would have cost consumers around £500 million. The injunction was requested by eight firms, including flexible generation company Peak Gen. Ofgem announced plans last March to slash the residual element of triad avoidance pay- ments from around £45/kW to just £2/kW. Despite fierce opposi- tion from distributed generators, it confirmed the decision in June, revising the level to between £3/kW and £7/kW. Interconnector regime uncertain Political Agenda David Blackman Talks between the government and the developers of the next wave of new nuclear plants look to have reached a crunch point. Senior executives from Kepco, the preferred bidder for the Moorside plant in Cumbria, are understood to have recently been in the UK to discuss how to finance the project. Tim Yeo, former chair of the Commons energy and climate change committee and now chair of the New Nuclear Watch Europe campaign, says the gov- support it is now, with gilt rates still at historically low levels. But the Treasury orthodoxy is that public borrowing must be avoided, although the collapse of construction company Carillion has raised big question marks over the push to offload state spending into the private sector. The issue for the UK govern- ment is whether it really wants nuclear to be part of its energy mix. Whether or not projects end up on the government books, we end up on the hook. ernment should offer direct sup- port for projects like Moorside. He is picking up on analysis in the National Audit Office report on EDF's Hinkley plant, pub- lished last year, which said the government could have slashed the project's construction costs by tapping its ability to borrow at ultra-low interest rates. Yeo argues that the cost of electricity generated by the new plants could be as low as £70/ MWh if this happened, which compares well with the £74.75 subsidy secured by Innogy for a windfarm at September's con- tracts for difference auction. And if ever there was a time for this kind of long-term "The collapse of Carillion has raised big question marks"

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