Utility Week

UTILITY WEEK | 9TH - 15TH MARCH 2018 | 3 This week 4 | Seven days 6 Policy & Regulation 6 | News Cox eyes dividends in water crackdown 7 | View from the top Matthew Wright, managing director, Ørsted UK 8 | Conference report Water UK City Conference 10 | Analysis Will more WOCs change hands after the Portsmouth Water deal? 12 | Analysis Reforming the Renewable Heat Incentive 13 | Market view Utility credit ratings have declined in the face of commercial and regulatory challenges 14 | Market view Interim managers help water companies get in shape for PR19 15 Finance & Investment 15 | News Greencoat UK Wind grows portfolio to £1.4bn 17 | Analysis A look at the top infrastructure funds investing in the UK 18 | Analysis Storage was the big loser in the last capacity auction. What now? 20 Operations & Assets 20 | Market view Turn disruptive technologies into opportunities in the digital world 23 Customers 23 | News Ofgem confirms ban on back-billing 24 | Event Utility Week Consumer Debt Conference 30 Community 31 | Disconnector GAS 13 | Market view Utility credit ratings 17 | Analysis Top infrastructure funds WATER 8 | Conference report Water UK City Conference 10 | Analysis Will more WOCs change hands? 14 | Market view Companies get in shape for PR19 15 | News Affinity reveals HS2 deals 15 | News New reservoirs 'cost less than drought' ELECTRICITY 7 | View from the top Matthew Wright, Ørsted UK 18 | Analysis What now for storage? 23 | News Good Energy queries consistency of ASA ENERGY 6 | News Swansea lagoon 'on Hinkley terms' 6 | News May pledge on EU energy market 12 | Analysis Reforming the RHI 15 | News Utilities should seek offshore protection 23 | News New CEO for First Utility 23 | News Perry: 'no useful comparisons' from international price caps' 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 Leader Ellen Bennett Echoes of Section 13 unsettle water sector W hen Jonson Cox took to the stage at the 18th Water UK City Conference last week, the chief executives in the room knew they were in for an uncomfortable half hour – and, as ever, the chairman of Ofwat didn't disappoint. His comments were in effect an answer to environment secretary Michael Gove's searing criticisms of the water sector, and his offer to give Ofwat any new powers it deems necessary to achieve reform (see news, p6, and analysis, p8). While Cox positioned his musings as "thinking aloud", the scope and detail of the programme he set out suggested he was further along in his planning. Indeed, he has had a number of detailed conversations with the leaders of what he calls "progressive" water companies, whose ideas have fed into his reforms. Many of the proposals for reforms have been heard before, with highly leveraged companies the clear target, but there was much that was new, too. The thinking on dividends – which Cox was at pains to point out came from "progressive" companies rather than the regulator – was radical. The dividend policy that was mooted looks very different to a private sector policy – which, Cox argued, made it appropriate for a public service company. It would be hard for any water business, or its investors, to argue with the need for a) an end to highly leveraged structures and b) a more progressive dividend policy. This may have implications for the kind of investors that want to play in water – but this writing has been on the wall for some time, and an investor change-around is already well under way, as Ancala Partners' acquisition of Ports- mouth Water this week clearly demonstrates. What will be more controversial is his proposal to "simplify" the process for introducing licence reforms. It had more than an echo of Section 13 – the gloves-off row that brought the sector to its knees shortly before he was appointed chairman, which he himself resolved. Given this inside knowledge of the sector's history, his experience running water companies, and the unique political circumstances, Cox will know just how far he can push companies. But they, in turn, will be concerned that reforms that look reasonable today could look very different under future governments – what might a Corbyn government do with enhanced powers of licence reform? Both sides have learned from history, and both sides know one thing: in the current political context, nothing would be more damaging for the sector than a second Section 13-style standoff. A compromise must, and will, be found. Ellen Bennett, Editor, ellenbennett@fav-house.com

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