Weekend press: Energy firms can force-fit prepayment meters again

In the roundup of sector stories from the national presses this weekend is news that Ofgem has granted three energy providers permission to begin forced installations of prepayment meters; the nation's climate policy led a senior Tory to quit; and the spotlight remains firmly on Thames Water as its new boss joins

Energy firms can force-fit prepayment meters again

Energy firms have been given the green light to force-fit prepayment meters in customers’ homes for the first time in almost a year after committing to strict new rules to protect the vulnerable.

Ofgem confirmed that three companies — EDF, Octopus and Scottish Power — had been signed off as compliant with legal changes made after widespread concern about aggressive debt collection in the energy industry.

The new rules allow the companies to collect debts by force-fitting prepayment meters in some cases as a last resort — but ban them from doing this in the homes of millions of people deemed to be vulnerable.

Those protected by the ban include people over 75 who do not have live-in help, families with children under two and people with severe health issues. If the firms break the rules they face enforcement action and unlimited fines.

Other energy suppliers, including British Gas, have not yet been confirmed by Ofgem as being fully compliant with the new rules, which are now part of suppliers’ licence conditions.

In February last year an undercover Times investigation found that British Gas was sending agents to break into its customers’ homes and forcibly install prepayment meters even when they were known to have extreme vulnerabilities.

Customers found to have been targeted in this way included people who were elderly or were known to have severe mental health problems and the mother of a four-week-old baby.

The Times’s findings led to Ofgem ordering all UK energy firms to suspend the force-fitting of prepayment meters. Lord Justice Edis, one of the country’s most senior judges, told courts to stop listing hearings for suppliers to get warrants to break into their customers’ homes in these cases.

After a public consultation about how to protect vulnerable energy customers, Ofgem announced its new rules for suppliers in September. The regulator said that forced installations would not restart until firms proved that they were complying with the new rules.

Tim Jarvis, director-general for markets at Ofgem, has written to suppliers, including the three now deemed compliant with the changes, to remind them that they must follow the new rules or face tough action and fines.

He said: “Protecting consumers is our number one priority. We’ve made clear that suppliers must exhaust all other options before considering forced installation of a prepayment meter … Our rules on when, and how, a prepayment meter can be installed are clear and we won’t hesitate to take action if suppliers act irresponsibly.

The Times

Tory MP Chris Skidmore quits with attack on UK climate policy

Former Tory minister Chris Skidmore is quitting as an MP in protest at the UK government’s plans to drill for more North Sea oil, in a move that leaves the Conservatives facing another difficult by-election.

Skidmore, who had already announced that he would not stand in the next election, said he was now quitting “as soon as possible” as MP for Kingswood in Gloucestershire and leaving the Tory party.

In his resignation letter he said it was “a tragedy that the UK has been allowed to lose its climate leadership” under Prime Minister Rishi Sunak.

Last summer, Sunak edged away from some crucial climate commitments by delaying plans to phase out sales of gas boilers and impose curbs on petrol and diesel cars, although he pledged to keep the wider 2050 Net Zero target.

Skidmore said he was quitting in protest at the government’s Offshore Petroleum Licensing Bill, which will be introduced in the House of Commons next week. The legislation requires the North Sea regulator to hold annual licensing rounds for drilling for oil and gas.

“I cannot vote for the bill next week. The future will judge harshly those that do.” Skidmore, who was energy minister when the British government signed its 2050 commitment into law, led a report into net zero for the government that was published in January 2023.  In his resignation letter he said the new law would send a “global signal that the UK is rowing ever further back from its climate commitments”.

There was no case for increasing fossil fuel production at a time when there was “exponential” growth occurring in renewable and clean power, he argued.  Skidmore added that he could no longer “condone” the government as it edged away from its previous climate policies.

“To fail to act, rather than merely speak out, is to tolerate a status quo that cannot be sustained. I am therefore resigning my party whip and instead intend to be free from any party-political allegiance,” he said. Skidmore’s move creates a fresh headache for Sunak, whose party is around 18 points behind Labour with a general election just months away.

The prime minister is already facing a by-election in the constituency of Wellingborough in Northamptonshire after former Conservative MP Peter Bone was found by a parliamentary watchdog to have bullied an employee and committed indecent exposure.

Financial Times

Keir Starmer comes out fighting for £28bn green investment plans

Sir Keir Starmer said he was ready to take on the Tories over his green investment plans, insisting: “This is a fight I want to have.”

The Labour leader accused Rishi Sunak of seeking to “weaponise” ­Labour’s pledge to borrow up to £28 billion a year.

Predicting that such a move would backfire on the Tories, Starmer said he was confident voters would support borrowing to invest in green energy. He added that the plans would not come at the expense of economic stability.

Conservative strategists believe the borrowing pledge made by Rachel Reeves, the shadow chancellor, in 2021 is ripe for exploitation. They have sought to paint it as an unfunded spending commitment and believe that attacks have already led ­Labour to amend the pledge.

Some Tories hope that further pressure would prompt Labour to make more changes, exposing Starmer to ­accusations of “flip-flopping”. The ­Labour leader has said, however, that he would relish the row as both parties prepare for what is likely to be a long build-up to the election campaign. Starmer told Sky News: “It’s absolutely clear to me that the ­Tories are trying to sort of weaponise this issue. This is a fight I want to have.”

He said voters would welcome a long-term strategy to slash bills and reduce Britain’s energy dependence on other countries. He added: “If they want that fight on ‘borrow to invest’, I’m absolutely up for that … bring it on.”

Starmer said Labour would work with business and help to grow green energy through various means, including reforms to the planning system.

He added: “We will put in investment for the future. And that’s where the £28 billion figure comes from. That’s subject to the fiscal rules, because economic stability is very, very important.” However, debate about whether to further scale down the pledge continues within the party. Some senior figures believe the projects to be funded through the “green prosperity plan” should be extended to ­include capital spending on housing or transport.

The Times

UK to launch Europe’s first Haleu uranium project 

The Government has allocated £300 million to develop high-assay low-enriched uranium (Haleu) in a bid to cut Vladimir Putin out of the UK’s future energy needs.

While the current nuclear fleet primarily runs on uranium fuel enriched up to 5 per cent, the next generation of reactors require uranium enriched to between 5 and 20 percent – known as Haleu.

However, this fuel is currently only commercially produced in Russia, potentially leaving Britain at the mercy of Putin as the Government prepares for the launch of advanced reactors in the early 2030s.

By launching the UK’s own programme, ministers hope to sidestep Russia and carve out an opportunity to supply the world with specialist nuclear fuel.

A Haleu production hub is planned for the North West, with the Government providing an extra £10 million to develop the skills and sites to produce other advanced nuclear fuels.

Claire Coutinho, the Energy Secretary, said: “We stood up to Putin on oil and gas and financial markets; we won’t let him hold us to ransom on nuclear fuel.

“Britain gave the world its first operational nuclear power plant, and now we will be the first nation in Europe outside of Russia to produce advanced nuclear fuel.

“This will be critical for energy security at home and abroad and builds on Britain’s historic competitive advantages.”

The Department for Energy Security and Net Zero (DESNZ) said that the plans would also help build new supplies of cheap and clean domestic power, supporting the transition to net zero.

Ministers are targeting using nuclear energy to deliver up to 24GW of power by 2050 – a quarter of the country’s electricity needs.

The Telegraph

Oil from new licences ‘would make little difference’ to UK energy security

Oil from new licences granted to North Sea producers and sent to UK refineries would account for less than 1% of the fuels used here in 2030, analysis has found.

The Energy and Climate Intelligence Unit (ECIU) said new projects like Rosebank would therefore make little difference to the UK’s energy independence and security – one of the Government’s key arguments for supporting further production.

It has also said North Sea oil and gas would reduce the UK’s reliance on imports and therefore reduce the emissions involved in shipping.

In answer to a written parliamentary question, the Government accepted that around 80% of the oil produced in the UK is refined overseas into products that are then shipped back over.

It also said “it is not desirable to force private companies to ‘allocate’ oil and gas produced in the North Sea for domestic use”, appearing to admit that much of the oil produced by Rosebank and other projects would be sold abroad.

The Government is also trying to pass legislation, due in the Commons on Monday, that would require the North Sea regulator to invite applications for new oil and gas licences on an annual basis instead of the five-year average currently in place.

Critics have accused the Government of backing new production as a way to create a dividing line with Labour as a general election approaches.

Professor Gavin Bridge, fellow of the Durham Energy Institute at Durham University, said: “The reality is very little of the oil pumped from the North Sea is refined and sold on British soil, and even then the price is largely dictated by international markets.

“The notion that more drilling on the continental shelf boosts our energy security doesn’t stand up to scrutiny.

The Evening Standard

Oil and gas will power Britain for decades to come

Britain must kickstart a drilling race to extract the billions of barrels of oil and gas that remain offshore, says the chief executive of the North Sea Transition Authority (NSTA).

Stuart Payne is clearing the way for producers to exploit the oil and gas that still lie under the UK’s continental shelf, which he says will help maintain the country’s energy security for decades to come.

Within the next few weeks, his organisation is expected to issue up to 88 new oil and gas licences – which will mark a jump on the 27 issued in October.

The move is likely to infuriate environmentalists fighting to end new drilling but will delight many in the energy industry.

“I am a shameless optimist when it comes to the North Sea,” says Payne. “Being candid, there’s a race to get that oil and gas into production, in terms of the economics involved and in terms of the infrastructure.

“Oil and gas has clearly been a dominant part of the North Sea’s history for the last 50-60 years. And it’s going to be a significant part of its next 25-40 years.”

The UK’s offshore operators have produced 47 billion barrels of oil from the North Sea, Irish Sea and Atlantic waters over the last five decades.

However, Payne says that 15 billion barrels of oil and gas remain in unmapped areas of the UK’s surrounding oceans, plus a further nine billion in parts already explored or drilled.

Payne’s comments come as Parliament prepares for Monday’s second reading of the Offshore Petroleum Licensing Bill which would require the NSTA to hold oil and gas licensing rounds every year instead of irregularly, as happens now.

Energy Secretary Claire Coutinho has argued that the domestic oil and gas industry is vital to the UK’s energy security and economy so accelerating licensing for exploration would increase investor confidence and make the UK more energy independent.

The fact that Payne shares this view will prove controversial given that Labour, the Liberal Democrats and the SNP have all vowed to halt new drilling.

Many banks have also said they will not lend money for new oil and gas projects, while just a few weeks ago the UK signed up to the Cop28 pledge to “transition away” from fossil fuels.

However, Payne believes there is no contradiction between approving new oil and gas developments and working towards net zero.

He says that while the UK’s oil and gas sector may be in long-term decline, it will remain essential for years to come – both for energy security and for the development of low-carbon energies such as mass hydrogen production, CO2 capture and storage, and offshore wind.

The Telegraph

Jeremy Hunt urges Thames Water to ‘get a grip’ on outage payouts

Chancellor Jeremy Hunt has called for Thames Water to “get a grip” on awarding compensation to Surrey residents who faced problems with their supply for several days.

The MP for South West Surrey said hundreds of constituents had complained about the claims system.

He also raised concerns that issues over the firm’s infrastructure had “not been resolved” after the loss of water in November.

Thames Water has since apologised.

In November, a major incident was declared after thousands of customers in the Guildford and Godalming area were left without water for several days.

Thames Water apologised, saying Shalford treatment works in Guildford had faced issues after Storm Ciarán.

On BBC Radio Surrey Mr Hunt said “people are finding they’re not getting awarded the compensation that they should be getting”.

“I’ve had hundreds of messages, and some of these people have been given peanuts for not having had water for a week, or even told that they did have their water when they didn’t,” he said.

He added residents were “absolutely furious” about the incident, which affected up to 12,000 people and businesses.

“Thames Water just need to get a grip on the problem,” he said.

The chancellor, who held a public meeting with Guildford MP Angela Richard and the interim co-chief executive of Thames Water in December, said he would hold another meeting with the company’s outgoing chief this week.

He said he was also in talks with Thames Water’s compensation team and had invited the firm to attend another public meeting by spring.

The company was also forced to apologise on Boxing Day after further outages in parts of Guildford.

Mr Hunt said he was “concerned that the fundamental problems” with its “antiquated” infrastructure had “not been resolved”.

But he added Thames Water was putting in about £100m into the area as part of a government requirement for water companies to invest £56bn over 25 years.

A Thames Water spokesperson said it was addressing claims on a case-by-case basis.

BBC News

Thames Water’s new boss faces tide of problems

Thames Water’s new chief executive, Chris Weston, takes the helm of Britain’s largest privatised water company on Monday, facing the daunting task of persuading investors, lenders and regulators to support plans to turn around the debt-laden business.

Weston, a former executive at power supply firm Aggreko and at British Gas, has to convince investors nursing multimillion-pound losses that he has the management expertise and vision to put the water monopoly on a stable footing, despite ongoing regulatory uncertainty and the threat of penalties and legal fines for leakage and sewage outflows.

He takes over after the former chief executive, Sarah Bentley left the company last June, following a boardroom bust-up that sparked fears over Thames Water’s financial viability, forcing the government to draw up plans for the utility’s temporary nationalisation.

Thames Water’s overarching group is burdened with a consolidated debt mountain of £18.3bn as of March 31, up from £15.4bn the year before. It needs to refinance £1bn of debt by the end of 2024 as well as raising £3.25bn of new equity by 2030, which is needed to continue to operate and maintain the business. There is a risk that investors — including private equity, sovereign wealth and pension funds — could object to injecting fresh equity.

There was “no certainty” that the conditions for any additional shareholder funding would be met, Thames Water warned in a prospectus issued to bondholders in October. In addition, any funding “could be vetoed by a shareholder or shareholders”, it added.

The company, which provides water and sewerage services to around a quarter of the population in England, is also facing operational pressures including poor performance on leakage and sewage discharges and an increase in maintenance costs, which is sucking up cash.
The average water trunk main — some of which are large enough to require scuba divers for repairs — is over a century old in London, or 78 years old across the region, while around 14 per cent of the oldest cast-iron pipes have been buried in the ground for 150 years, according to Thames Water.

Colm Gibson, managing director at Berkeley Research Group, said there were all the hallmarks of a “particularly eventful year for Weston, who would need to demonstrate early successes to win over stakeholders”.

The task of persuading investors to inject equity is difficult after Thames Water’s largest shareholder, the Canadian pension fund Omers, took a 28 per cent writedown on the value of its holdings in the year to March 2023. Thames Water’s second-largest investor, the USS — which represents the retirement savings of academics in the UK — has written down the value of its holding by almost two-thirds.

The Financial Times

Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.