Utility Week

4 | 9TH - 15TH FEBRUARY 2018 | UTILITY WEEK STORY BY NUMBERS Seven days... National media Energy shares slide as Wall Street faces worst week since 2016 The US energy sector was the biggest weight around the S&P 500's neck on Friday, aer both Chevron and ExxonMobil's earnings disappointed and oil prices slid lower. The S&P 500 energy index had started 2018 on fire, rising as much as 8 per cent by late January thanks to a recovery in oil prices, but on Friday it was down 3.5 per cent by midday in New York, the biggest one-day drop for the industry's shares since mid-2016. That extended this week's reversal to nearly 6 per cent. Financial Times, 2 February Shell doubles profits but faces multibillion- dollar Dutch quake bill Shell more than doubled its profits last year, thanks to rising oil prices, but has admitted it faces a multibil- lion-dollar bill for several years to compensate householders affected by earthquakes linked to its gas field in the Netherlands. The quake bill warning came as Shell reported strong earnings of $15.8 billion for 2017, up 119 per cent on 2016, on a current cost of supplies basis, the measure most closely watched. The Guardian, 1 February Cape Town 'Day Zero' projection pushed back The day when taps in Cape Town are switched off because of a shortage of water has been moved 25 days later, to 11 May. It was previously set at 21, 12 and 16 April. The decision is based on projections of a sharp drop in agricultural use in March and April. Day Zero is the day when the aggregate level on reservoirs drops to 13.5 per cent. At present it stands at 25.5 per cent. But the city said many agricultural users have used up the water allocated to them, and therefore consumption is likely to fall sharply. The Independent, 6 February Gove 'concerned' about behaviour of water firms M ichael Gove has sig- nalled a crackdown on executive pay and offshore financial arrangements to address the "concerning" behaviour of water companies. In a letter to Ofwat chairman Jonson Cox, the environment secretary said the government was prepared to give the regula- tor more powers to tackle poor practices in the industry. He wrote: "The water sector has rightly come under even closer scrutiny in recent months with growing concern about the behaviour of water companies. The use by some companies of opaque financial structures based in tax havens and high gearing is deeply concerning. I also share your concern that some water companies have for many years been making exces- sive profits." Yet in a robust defence of the sector, Water UK chief execu- tive Michael Roberts said Gove's letter "unwittingly risks painting a distorted picture of the water industry". He said it would be wrong to give the impression all the issues apply to all compa- nies, or that nothing is being done. "He is absolutely right to ensure that such a vital service is being delivered responsibly. But let's not allow that to obscure how much has been achieved to date – and the resolve and ability of companies to strive for better." Gove's letter thanked Ofwat for "pressing companies hard" to change behaviour "not least where it has a direct bearing on their corporate, financial and operational resilience". But he stressed there was "more to be done" and listed behaviours that undermine trust, including: offshore financial arrangements; securitisation; highly geared structures; high levels of execu- tive pay; and high dividend payments. He urged Cox to report back with "findings and recommendations". Responding, Cox said it was an "immense privilege" for a company to hold a monopoly public service licence and it "must not be taken lightly". KP Bill accuracy increases consumer trust A BEIS Energy and Climate Change Public Attitudes Tracker survey of 2,078 UK adults aged 16 and above found that for those on low incomes energy bills are still a worry, and that consumers are more likely to trust energy suppliers that reflect energy use accurately in their bill. 73% are more likely to trust suppliers that provide accurate billing. 51% are less likely to trust suppliers to increase the energy efficiency of their homes. 79% support the use of renewables. 35% support the use of nuclear energy. "The letter Gove sent to Jonson Cox unwittingly risks painting a distorted picture of the water industry" Michael Roberts, chief executive, Water UK

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