Utility Week

UTILITY WEEK | 4TH - 10TH MAY 2018 | 11 Policy & Regulation This week NIC: drought could cut off water supply Commission warns the government there is an immediate need to boost supplies and cut demand Households face a high risk of having their water cut off in times of severe drought, unless utilities slash leakage and build a new grid to transport supplies around the country, the govern- ment's infrastructure watchdog has warned. The National Infrastructure Commission (NIC), in a report published last week, urges the government to "immediately" start adopting a twin- track approach to boosting supplies while cutting demand. It recommends that Ofwat launch a competition by the end of 2019, alongside its upcoming Price Review, to ensure the provision of at least 1,300 megalitres per day (Ml/day) through a national network that would transfer water from areas of surplus to those that need it. Transfers could provide about 700Ml/day more capac- ity and increase the system's overall adaptability, accord- ing to the report, although an independent national framework and strengthened regional approaches may be needed to deliver infrastructure on this scale. The report also says the provision of new infrastruc- ture, such as reservoirs and desalination plants in a wider range of places, is needed to reduce costs. The NIC urges the Department for Environment, Food and Rural Affairs to set an objective for the water industry to halve leakage by 2050, with Ofwat agreeing five-year commitments for each company. It says around 2,900Ml/day is lost as a result of leakage, and progress on tackling this has "stalled" since the 2000s. The report says there is a one in four chance, over the next 30 years, that large numbers of homes will have their water cut off for an extended period because of severe drought if no action is taken on its recommendations. DB See analysis, p16 ENERGY Price cap legislation clears the Commons The government's energy price cap legislation has cleared the House of Commons. MPs agreed on Monday to approve the third reading of the legislation, which will give Ofgem powers to impose a ceiling on standard variable and other default tariffs, without a vote. The only division during the debate centred on an amend- ment by the Labour opposition, which was defeated. This would have imposed a restriction, once the temporary cap has ended, on the difference between the cheapest and most expensive rates charged by suppliers. Energy and climate change minister Claire Perry said this amendment would have resulted in "perpetual government inter- vention in the energy market". The bill will now be sent to the House of Lords for its final read- ing before receiving Royal Assent. ENERGY New CMA chief to focus on energy Energy has been named as one of the areas that the incoming chair of the government's competition watchdog has been urged by MPs to bone up on in his new role. The Business, Energy and Industrial Strategy (BEIS) select committee last week endorsed ex-MP Andrew Tyrie's appoint- ment as chair of the Competition and Markets Authority (CMA). Tyrie, who was chair of the Treasury select committee before stepping down as an MP at last year's general election, was put forward to head the CMA by BEIS secretary of state Greg Clark. Following a pre-appointment hearing with Tyrie, the select committee concluded he has the "professional competence and personal independence" to fulfil the role of CMA chairman. While the committee says Tyrie is a "recognised expert" in the regulation of financial services, it recommends that he engage "as a priority" with busi- nesses and consumer groups in markets where he has less experi- ence, such as big data and energy. PAN-UTILITY Brexit negotiations 'should prioritise climate and energy' The UK's leading utility bosses have united to urge the govern- ment and the European Commis- sion to put climate and energy on a par with security and defence in Brexit negotiations. Businesses and investors have sent a joint letter to Michel Barnier and David Davis calling for an "ambitious" EU-UK climate and energy agreement in line with the 2015 Paris Agree- ment on climate change. They urge the commission's chief Brexit negotiator and the UK government's secretary of state for exiting the EU to develop a comprehensive climate and energy chapter covering both trade and non-trade issues. Drought: but 2,900Ml/day is lost through leaks Alan Whitehead has branded the government-commissioned Helm review as an "unbelievably rushed job" that could "consid- erably" push up household bills if one of its key recommenda- tions is implemented. Speaking in a Parliamentary debate on the review last week, Labour's shadow energy spokes- man said the review of energy costs was "an extended opinion ENERGY Whitehead: government's Helm review 'unbelievably rushed job' piece" by its author Professor Dieter Helm, who he said had used evidence selectively to justify his conclusions. Whitehead said he supported some of Helm's conclusions but raised concerns about his recommendation that industrial energy users should be exempt from paying the legacy costs of clean energy policies. He said: "The bundle of legacy will reach back on consumers' bills, in just the way that the social and environmental costs that appear on bills now are also borne by customers." He also slammed as "a recipe for extreme inefficiency" Helm's proposal that firms generating intermittent renewable energy should be forced to supply their own back-up capacity. He said: "The market would have a series of near-redundant back-up power stations", and that companies having to maintain this spare capacity would "probably sub- stantially" increase the cost of energy. Shortfalls due to intermit- tent wind and solar are currently picked up by the wider market. Energy minister Claire Perry defended the report, which she said contained some "incredibly far-reaching recommendations".

• Cover