Editor's letter: Yorkshire Water and energy panel controversy cause a stir

Yorkshire Water may be on the bring of a sale which will dispose of its business customer book. Meanwhile, conflict between old and new system players is shaking up the energy industry.

Competitive markets may be the darling of capitalist society, but it seems they still sit uneasily with incumbent water companies.

In what appears to be one of the least surprising surprises ever to make a headline, rumours have sprung up that Yorkshire Water may be on the cusp of a complete exit from non-domestic competition.

We’re now just over a month away from the opening of the business water retail market to competition. Yet there were few who were shocked when Yorkshire announced it would backtrack on its well-progressed plans to transfer business customers to its retail spin off Three Sixty and even fewer who boggled at the idea it may be about to sell off its non-domestic customer book for good.

Instead, the slightly jaded message was that plenty of other water firms – however publicly they may profess to be preparing for the grand opening of the market – are thinking along exactly the same lines.

What does this say about the great endeavour that is market opening? Is retail competition a failure before it has begun?

Not necessarily. Incumbents have been obliged to make their businesses ready for market opening to remain compliant. But this does not mean they have the enthusiastic backing of shareholders to charge into new, uncharted territory. Nor does it mean that they will close their ears to attractive offers for their non-domestic customer books – that’s just business sense.

Meanwhile, if incumbents are receiving offers, new retail brands that really believe they can make a buck in competitive water retail (despite tight margins) by snapping up early market share, have everything to play for.

....Over in energy, a row has broken out over the ability of new market players to influence the workings of the old energy system. The scuffle over the make-up of the CUSC panel is indicative of an energy system that is going through a painful metamorphosis. It raises again a question that has already been asked: do we need a new system architecture, unwound from ingrained thinking, for a new world of flexible and distributed energy?

Author: Jane Gray,
Channel: Policy & Regulation , People

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