Utility Week

UTILITY WEEK | 18TH - 24TH MAY 2018 | 7 Policy & Regulation This week Full investigation for Npower/SSE merger CMA refers merger for phase two inquiry, after initial probe found tie-up could reduce competition The proposed Npower/SSE merger has been referred for a second stage of investigation by the Competition and Markets Authority (CMA). The two energy giants announced in November that their British household energy supply and services businesses would join forces, reducing the big six energy suppliers to five. But now the deal to merge Npower and SSE's retail operations has been referred for a full investigation, known as a phase two in-depth inquiry, aer the initial probe found the tie-up could potentially reduce competi- tion, which might lead to higher prices for consumers. The CMA said Innogy's Npower and SSE had failed to offer measures to address its competition fears, having earlier set a deadline of 3 May for the pair to put forward proposals. But when approached for comment by Utility Week, a spokesman for Npower said not responding to the CMA's request for further measures was always the intention. He said: "We did not put forward measures to address the CMA's concerns because we firmly believe this merger will be good for competition as it stands." He added: "It will create an independent, customer- focused company, offering customers a more efficient, improved service – and bring benefits to the wider market as well." A decision on the merger will now be made by an independent panel. A final report detailing its reasoning is scheduled to be published on 22 October. AC ENERGY CMA: heat networks should be regulated Heat networks should be subject to statutory regulation, the competition watchdog has recommended. The interim report of the Competition and Markets Author- ity's (CMA) investigation of heat networks, published on 10 May, found many offer prices that are the same or lower than a gas or electricity tariff and have compa- rable levels of customer service. However, it found some net- work customers, mainly living in privately owned or rented prop- erties, pay "considerably more" for their heat, and that across the board heat network customers are not getting the same levels of protection received by gas and electricity customers. The CMA has provisionally recommended a statutory regime under which suppliers must adhere to mandatory rules and criteria around price and quality; better information on networks, contracts and bills; consumer protections for all heat network customers; and steps to improve the design and build of networks. ELECTRICITY Fallon: 'CfD auctions timetable needed' Former energy minister Sir Michael Fallon has urged his ex-Cabinet colleague Greg Clark to give offshore wind investors greater confidence by setting out a clear timetable for the next rounds of the contracts for differ- ence (CfD) auctions. In a letter to the Business, Energy and Industrial Strategy secretary of state, Sir Michael recommends the government confirm the quarter in which the 2019 CfD auction will take place. And he says the next auction for CfDs, which provide low-carbon generators with a guaranteed strike price for electricity, should be held in a specific quarter no more than 18 months later. GAS IMechE: 'step up' hydrogen support The Institution of Mechanical Engineers (IMechE) has called on the government to "step up" its support for the use of hydro- gen to decarbonise the energy system across power, heat and transport. In a new report, the profes- sional body extols the virtues of the gas as a much-needed source of storage and a "conduit for connecting the energy system together". "Government and industry need to step up efforts to provide funding programmes and dem- onstration sites to encourage the greater use of hydrogen as energy storage," said Jennifer Baxter, lead author and IMechE head of engineering. Customer numbers: further scrutiny needed Political Agenda David Blackman "Wylfa should count more than Wenger in parliament" MPs have been discussing Arsene Wenger, who has stepped down aer 22 years as Arsenal man- ager. Tory backbencher Huw Mer- riman sponsored an adjournment debate this week on Wenger's contribution to English football. No such luck for Caroline Lucas, who has been unable to secure time in the parliamentary timetable to debate the relatively trivial matter of reports that the government is preparing to offer billions of pounds of under- writing support for Horizon's use of the cheaper finance it can raise since the publication of a National Audit Office report last year. This called for "alternative" models of finance to be explored for projects such as Hinkley. And a decision by Hitachi to turn its back on the Wylfa plant would hardly help already shaky Japanese confidence in the UK's prospects as an inward invest- ment location post-Brexit. Arsenal fans will no doubt disagree, but Wylfa counts more than Wenger. planned 3.2GW nuclear plant on the island of Anglesey. The reports have emerged fol- lowing a recent meeting between prime minister Theresa May and Hiroaki Nakanishi, chair of Horizon's backer Hitachi. The Treasury has a long- standing objection to using the government's balance sheet to finance infrastructure. It prefers to see such projects paid for purely privately, which is one of the reasons why the cost of the Hinkley Point C nuclear plant was offloaded onto customers' bills via the contracts for differ- ence auction process. But pressure has been mount- ing on the government to make

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