The news that the regulator had sent all but one of the distribution network companies back to the drawing board on their ED1 business plans will have been less popular in network offices up and down the country, however. Contrary to Tim Yeo’s assertion that the networks “may be getting away with murder”, these price-regulated businesses are actually held rigorously to account and, unlike their supplier brethren, had all just proposed cutting their prices, which would have fed through to consumers’ bills. This wasn’t enough for Ofgem, though, which took issue with cost efficiency at all the networks except WPD. It must be nice for Ofgem to flex muscles it can only dream of in the supply market, but issues with the business plans aside, it’s unfair to simply visit the sins of the suppliers on the networks.
It wasn’t just networks feeling the pinch. As the RIIO fast-track was announced, Labour took the affordability fight to the water sector. The proposal of an amendment to the Water Bill making social tariffs compulsory was another smart political move, hot on the heels of Labour’s promised price freeze (should it win the next general election). It’s smart because it would give Labour all the credit for “cutting water bills for the poor”, while the water companies would shoulder all the responsibility.
It seems that all you need to win the argument in the utilities sector at the moment is to cry “affordability”. Let’s hope sensible dialogue returns in time to stem the flow of renewables investment now leaving the country and resolve the longer-term issues such as abstraction reform. Meanwhile, what’s a beleaguered utility to do? Well, selling 770,000 of your retail accounts for £218 million while securing a 20-year guarantee that your wholesale operation (where you make the majority of your profits) will retain their business might not be a bad place to start.