Utility Week

UTILITY WEEK | 29TH JUNE - 5TH JULY 2018 | 15 This week Change of ownership could hit public hard Direct loss to UK savings and pensions of water renationalisation could amount to £8.4 billion Water employees could be thou- sands of pounds out of pocket if Labour does not pay full market price for its planned renation- alisation of the industry, a new report has warned. According to new research from NERA Economic Consulting on the impact of utilities nation- alisation on UK households' sav- ings and pensions, £182 billion is the fair market value (FMV) of the water and electricity network companies Labour has pledged to bring back into public ownership. The report, which was commissioned by water companies including Severn Trent and Anglian Water, estimates that the loss for the average UK household would be around £510 if the government paid the £140 billion regulated capital value (RCV) of the companies. However, NERA says the impact would be worse for those in employee share schemes – half to three- quarters of those working for listed South West Water, Severn Trent and United Utilities. Those with a shareholding of £10,000 would face a loss of around £2,300 if these com- panies were renationalised on an RCV basis, it estimates. The report also says members of UK local authority pension funds, which are invested in the sector, could be "particularly adversely affected". Based on estimates that British households collec- tively own one-fih of the UK stock market through their investments, the report calculates the direct loss to UK savings and pensions would amount to approximately £8.4 billion of the overall £42 billion difference between the RCV and FMV. DB ENERGY Industry 'should fund innovation' Energy innovation should be funded by the industry rather than by the regulator, according to the chief executive of UK Power Networks. Speaking at Utility Week's Energy Summit in Westminster last week, Basil Scarsella said it was good Ofgem had brought in innovation funding when it did, but that now, with the costs of different technologies coming down, it should be up to the energy networks to fund their own innovation. Ofgem introduced two funding vehicles to create "innovation stimulus". First, the Electricity Network Innovation Competition (NIC) is an annual opportunity for electricity net- work firms to compete for part of a £90 million funding pot for the development and demonstration of new technologies, operating and commercial arrangements. Second, a set Network Innova- tion Allowance (NIA) of between £1 million and £5 million is given to each of the 22 gas and electric- ity network licensees as part of their price control allowance. WATER Bondholders vote for Cayman closure Yorkshire Water has received an "unequivocal vote" of approval from its bondholders to close its three Cayman Islands subsidiaries. More than 98 per cent of its bondholders and 100 per cent of US Private Placement (USPP) noteholders voted in favour of the changes required to close the offshore companies. The result means £3 billion of bonds and USPP notes can be transferred into a new UK incorporated company, which is expected to take place in July. Yorkshire Water announced its intention to close its Cayman Islands subsidiaries last October. ENERGY Smart funding to help SMEs cut usage The government has awarded £8.8 million of funding to help small and medium enterprises (SMEs) reduce their energy consumption through the use of smart meters. As part of the government's Industrial Strategy, the UK-based competition winners, ranging from small energy management companies to tech firms Sam- sung and Toshiba, will use the funding to develop and evaluate technologies that will help SMEs across a range of sectors to tackle their energy use. It is estimated that the use of smart technologies such as smart meters could help the UK save up to £40 billion in energy costs over the decades to come. What a waste: £510 loss for average household Stock watch 13.00 12.00 11.00 10.00 9.00 8.00 EDF SHARE PRICE, FIVE DAY Oct 2017 Feb 2018 Jun 2018 EDF SHARE PRICE, FULL YEAR EDF shares shot up by around 5 per cent last Thursday to almost €12 each following reports that its majority shareholder, the French government, was considering splitting its nuclear arm from the rest of the group. The reports were later denied by Martin Vial, the head of France's state holding company, APE. 12.00 11.80 11.60 11.40 11.20 11.00 21 Jun 22 Jun 25 Jun 26 Jun Finance & Investment euros euros

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