Utility Week

UTILITY WEEK | 9TH - 15TH FEBRUARY 2018 | 7 Policy & Regulation This week Call for post-Brexit rules close to EU's Energy UK sets out its wish list for the upcoming trade negotiations between the EU and the UK Energy companies have called for the industry's regulatory framework to stick closely to the EU's. In a paper launched last week about future UK-Irish energy relationships, Energy UK sets out its wish list for the upcoming trade negotiations between the EU and the UK. The Energy UK paper calls for: maintaining a close trade relationship through regulatory alignment with the Internal Energy Market (IEM); maintaining the Single Energy Market on the island of Ireland; and continued close work with the EU on tackling climate change. It says it is "crucial" that any future agreement between the EU and the UK includes a "full and com- prehensive energy and climate chapter" that preserves existing "close co-operation and collaboration". In order to avoid disruption to energy trade arrange- ments, it urges the UK to continue to abide by EU IEM rules in any transition period following Brexit in March 2019. It says: "To avoid a cliff-edge situation we should agree to IEM rules to energy interconnection and trade aer exit day during the transition period and keep the current terms that allow for the UK participation in the EU Emissions Trading System (ETS)." The best option for the industry would be to remain part of the ETS, it adds. The paper also says the UK should seek to continue its input into EU energy policy and regulation by retain- ing its participation in European regulatory bodies such as the European Network of Transmission System Opera- tors for electricity (Entso-E). DB ENERGY MP: Ofgem must curb DNOs or be scrapped Ofgem should be scrapped unless it uses next year's half- way review of the RIIO to curb distribution network operators' profits, according to a backbench critic of the energy utilities. John Penrose MP sent a letter to Ofgem signed by 33 of his fel- low backbenchers, calling on the regulator to review RIIO in 2019. It accused the DNOs of running an "extremely safe, slow-paced, low risk … monopoly", and of making "consistently higher" returns than firms in riskier parts of the economy. In reply, Ofgem chief execu- tive Dermot Nolan said short- term changes would lead to a "significant loss of confidence" among investors in the DNOs, which would increase their cost of finance and ultimately lead to higher consumer bills. Penrose responded: "If Ofgem can't see why it's wrong to let them go on getting fat at energy bill-payers' expense, what's the point of having them at all? They'll have to be scrapped and replaced with a proper cross-sector regulator." ENERGY Regulator to be able to seize any files The government is to give Ofgem tough new anti-insider trading powers to seize documents from energy companies in bulk. The Department for Business, Energy and Industrial Strategy (BEIS) said the new powers are designed to help the energy regulator tackle industry abuses in the wholesale market. Under existing powers, Ofgem's investigators can seize documents while searching premises if they believe they are relevant to their probe. How- ever when presented with large numbers of files, it may not be practical to determine which are relevant, particularly when they are stored electronically. The new powers will allow large volumes of documents to be seized for siing elsewhere. WATER Ofwat's innovation channel goes live Ofwat's bid to boost innovation in the water sector as part of PR19 went live on Tuesday with the launch of its Spark! campaign. Featuring new chief executive Rachel Fletcher, the digital drive comprises two videos a week over a four-week period, aimed at encouraging companies to "fully embrace" innovation and the opportunities it brings. Plans for the channel were first announced at Utility Week's Water Customer Conference in Birmingham last month by John Russell, Ofwat's senior director of strategy and policy. Coming apart: but close co-operation is urged Political Agenda David Blackman "The DNOs look short of friends at Westminster" Until now, the distribution network operators (DNOs) have succeeded in staying underneath the radar amid the mounting furore about energy prices. More than 20 years ago, anti-fat cat campaigners were parading a pig named aer the then chief executive of British Gas, Cedric Brown. Since then, the energy suppliers have been in the firing line whenever price hikes have occurred. It's easy to see why the focus has been on the suppliers: the Penrose had seized on figures in a recent report by the Energy and Climate Intelligence Unit, heavily disputed by the Energy Networks Association, showing that DNOs are making much bigger profits than the suppliers. And with Labour having pledged in last year's election manifesto to bring back the networks into public ownership, the DNOs look short of friends at Westminster. They could soon be looking back fondly to when they were overlooked. names of big six brands such as Npower and SSE appear on bills. By contrast, the level of awareness about networks is poor. But that could be chang- ing soon following a high-profile intervention in Parliament. Business, energy and indus- trial strategy secretary Greg Clark made a surprise re-entry into the energy prices debate last week at his departmental ques- tion time, when he called on Ofgem to adopt a "much tougher regime" on network pricing. He was responding to a ques- tion by John Penrose MP, leader of a backbench Parliamentary campaign last year calling for a cap on standard variable tariffs.

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