This week, Ofgem adopted the Competition and Markets Authority’s remedies for the amelioration of the energy market. This can be considered both good and bad depending on who you are and which remedies you want implemented.
EDF – probably relieved to be talking about something other than Hinkley – said it “supports the implementation of the remedies”. It also said, rather curtly: “We want to see a strong, independent, respected regulator trusted by customers and companies alike”.
The GMB union offered an opposing view, insisting that “Ofgem should be abolished”, which seems a little far-fetched. Its reasons? Government should take over the regulation of the industry so “both are accountable to Parliament”.
The remedy concerning price comparison websites has received particularly bad press – and rightly so. Surely restricting which companies such sites can show would more likely restrict than encourage competition by cutting out smaller companies which can’t pay commission?
This particular remedy has been described by some in the industry, specifically Luke Watson of GB Energy Supply, as “totally illogical” and likely to discourage competition. But Roger Witcomb, who headed up the probe, told Utility Week reporter Saffron, in an exclusive interview, that it was one the CMA felt “very strongly about”, and it wasn’t a difficult decision (interview to follow).
Fellow CMA panellist Martin Cave wanted a temporary price cap, to which Witcomb replied: “There is either a price cap or not. The difference is I think that Martin thinks you can put on a temporary price cap and when you take it off everything will be lovely, we thought that was very dangerous.”
Policy ambiguity
Meanwhile, the effects of the Hinkley debacle continue. Unions weren’t quiet on this issue either, with Prospect saying the effects of the government delay on the Hinkley decision could be “chaotic” and “potentially disastrous”.
Nuclear Industry Association chief executive Tom Greatrex warned that the government must make a “prompt decision” or risk spooking investors. Those investors sure do seem jumpy.
But let’s not dwell on Hinkley. After all, the government has done plenty of other stuff to upset the sector.
A thorn in the side of the renewables industry this week has been a sudden and merciless 35 per cent cut to renewable heat. This is the legacy of the Department of Energy and Climate Change, which laid the proposed cut before Parliament just days before its expiration. Now the Renewable Energy Association is urging the still unpronounceable Department for Business, Energy and Industrial Strategy to keep supporting the industry.
And Brexit reared its ugly head, as Frost and Sullivan suggested the medium- and long-term effects of leaving the EU could lead to a rise in electricity prices and supply security issue. And yet, other countries look set to follow suit…
In the water industry everyone was releasing their industry score ratings. Ofwat published its SIM scores, which Portsmouth topped. Water UK issued its developer services ratings, which Portsmouth topped (something tells me Portsmouth should stay in retail…) And the Environment Agency released the outcome of its annual environmental survey, which Severn Trent, United Utilities and Wessex Water topped. But I bet if Portsmouth had been included it would have come top…
‘Licenced to bill’
South East Water became the latest company to announce it has applied for a licence to operate in the retail market, with its business retail brand ‘Choice’ – named thusly for obvious reasons. And that makes 14.
Now we wait with eagerness for Affinity Water’s plans, which the company told me it will make known in September, although it seems pretty keen on staying in the market.
It looks unlikely that any more companies will follow Portsmouth, Southern and Thames and exit before the market opens, but you never know. And changes are sure to continue long after go-live.