A phrase that seems to keep cropping up in various contexts at the moment is that “this is not the time for business as usual”.
The harsh truth of this was illustrated in a series of announcements over the past week about major energy suppliers furloughing staff. Between Centrica, Eon and Ovo, over 11,000 staff have been placed on temporary leave. These actions will not have been taken lightly but with areas such as smart meter installations at a complete standstill, there was little choice.
Utility Week has since revealed that Scottish Power and EDF – who make up the remainder of the ‘big five’ – and major challenger brands, Bulb and Shell Energy have no plans to furlough staff. However, there are concerns for third party smart meter installers across the industry.
As both energy and water companies tackle the implications of coronavirus on their workforce, there is also frantic readjustments as the sector tries to understand the new levels of demand. Investec analyst Martin Young told Utility Week that “nothing should be off the table” to prevent sharp spikes in charges. He suggested potential options included deferring regulatory revenues from one period to another or using the public purse to cover policy costs.
The potential changes to the regulatory regime were picked up in an exclusive column for Utility Week members by Maxine Frerk this week. She looks at which parts of the regulatory programme could safely be put on hold, including elements of the Targeted Charging Review and some steps to improve competition.
The postponement of the COP26 conference and the impacts on the decarbonisation programme have also been discussed at length on Utility Week over the past seven days, including in this analysis on what it means for the sector and today’s webinar on the subject.
Last week, I wrote about the debate over whether the government should intervene in the energy retail market. Payment holidays and flexibility on debt will clearly be needed and the burden of this cannot sit solely with suppliers, who are already under huge pressure. However, the debate on how this support could be administered rumbles on. This week, Good Energy founder Juliet Davenport expressed her concerns that suppliers already struggling to survive could see any direct financial assistance from government as “free cash”. Despite her scepticism she does believe all steps must be taken to avoid a swathe of business failures in the sector during this crisis, with fears of the knock-on effect on the market as a whole.
If you are desperately searching for positives in a fairly grim landscape at the moment, then look to the renewable energy sector. A report this week pointed out that renewables became Britain’s main source of power over the first quarter of 2020 as a series of storms lifted wind generation to new highs. While this is expected to be a “temporary high”, there are suggestions that the coronavirus outbreak could be an opportunity to drive home the important role renewables can play in the overall energy mix.
As part of an ongoing series, we are examining the arguments put across by the four water companies referring Ofwat’s final determinations on their business plans to the Competition & Markets Authority. This week, Northumbrian Water’s Heidi Mottram gives her frank assessment that the regulator is backward-looking and has failed to grasp the importance of investing in resilience.
She said: “They (Ofwat) are trying to argue this is business as usual, but the fundamental point is the climate is changing so we must do things differently. We are scratching our heads to understand why Ofwat is not seeing the same thing the rest of us are seeing.”
Ofwat’s chief executive Rachel Fletcher will get her chance to address this and other concerns when she appears on a special Utility Week webinar next Friday at 11.45am, alongside her Ofgem counterpart, Jonathan Brearley. You can pose your questions and register for the webinar here.