Weekend press: Hot weather piles pressure on water companies

In our latest round-up of the weekend’s national news coverage, under fire water companies are expected to feel the heat even more with hosepipe bans now looking inevitable across the country. Infrastructure tsar Sir John Armitt warns that UK networks can’t cope with demand and fixed-price deals return as wholesale energy costs drop.

Spectre of hosepipe bans piles pressure on struggling water companies

As they travel through Devon and Cornwall this summer, holidaymakers will be told via bus stops, digital billboards, and flyers at service stations to save water during their visit.

The warning is not news to the roughly 1.4 million people living in the regions, some of whom have now been living under a continuous hose pipe ban for more than nine months.

It is a visible reminder that much of Britain has still not fully recovered from last year’s unexpected heatwave, when the country sweltered under record temperatures.

With rainfall worryingly low too, eight areas were declared to be experiencing droughts – prompting five water companies to announce hosepipe bans covering millions of households.

Now, with a dry spell from May continuing into June – and temperatures of up to 30 degrees celsius expected this weekend – experts are wondering whether summer 2023 could bring further nasty surprises.

According to the Met Office, the country is set for above-average temperatures in the coming months and near-average levels of rainfall. But if conditions end up being much hotter, it will spell serious trouble.

“We just have to wait and see,” says Lucy Barker, a drought expert at the Wallingford-based UK Centre for Ecology & Hydrology.

“From mid-May, river flows have been receding over time because we basically haven’t seen any rainfall. If that continues then yes, I think we’re likely to see some impacts.”

About one third of the water that comes out of British taps comes from underground sources, known as aquifers. Almost all of the rest is drawn from surface sources such as reservoirs, lakes, and rivers.

Since last summer, water companies have been counting on winter rainfall to replenish supplies, with mixed to positive results, says Barker.

There was a spell from mid-January and through February that was exceptionally dry, but then March was exceptionally wet, she says. “So we’ve had relatively good recharge, in the south and east.”

But rainfall was average in April, according to the Met Office, and then reached only 55pc of average levels in May, with river flows receding as the month went on according to the Environment Agency.

With two regions still officially classed as being in drought – Devon and Cornwall, and parts of East Anglia – it means the seasonal drop in reservoirs, groundwater levels and river flows has now begun.

The Government is monitoring the situation with water companies through the National Drought Group, but the Environment Agency has warned shocks like last summer’s heatwave “can change everything in an instant”.

Droughts – prolonged periods of dry weather – make everything harder for water companies. A lack of rainfall means rivers don’t fill up. Evaporation leeches stored water from reservoirs. Dry ground shifts, damaging pipes. And – understandably – people use more water to stay cool.

What’s more, critics say underinvestment in water infrastructure since privatisation has left Britain particularly vulnerable, with no new reservoirs built since 1991 – despite a population increase of roughly 10 million.

Continue reading here.

The Telegraph

UK energy networks ‘struggling’ with demand, Sir John Armitt warns

The UK’s electricity grid is still “struggling” with capacity issues, the country’s infrastructure chief has warned.

Sir John Armitt, chair of the National Infrastructure Commission, said the issue was a proving a challenge for the building of new homes and the rollout of electric vehicle (EV) charging points.

Last year, the construction of new housing in parts of west London was put at risk by “electricity capacity restrictions”, though a solution was found with National Grid and others to enable “smaller demand” developments to go ahead.

At a City Hall meeting on Thursday however, Sir John warned that the problem was still blighting several projects across the UK.

He told members of the London Assembly that electricity distribution was “ a key challenge” likely to get worse, as “electric vehicles and heat pumps will place unprecedented demands on the system”.

Sir John said: “I know from my own experience with other organisations that the distribution networks, not only in London, but in many places across the country, are struggling, already, to meet the extra demand.

“Whether that is extra demand as a consequence of significant housing developments – Nine Elms [the development around Battersea Power Station] I think was a classic example, where they were well into construction and still didn’t have the amount of the electricity that was going to be necessary to power that development.

“And we know that it’s a challenge for those who are trying to lay down EV charge points, where they would wish to get on with doing it, but cannot get on with doing it, because they’ve got to wait for the energy companies to provide them with the electricity.”

Sir John said one of the constraints faced by National Grid was the difficulty in receiving planning permission for much of the infrastructure needed to increase capacity in the long term – such as the onshore elements of offshore wind farms.

The Department for Energy Security and Net Zero has been approached for comment.

Evening Standard

Energy bills: Hotels stuck in pricey contracts as costs fall

Hotel bosses have accused energy firms of failing to pass on lower prices, warning businesses could be at risk.

Hotel boss Glenn Evans from Betws-y-Coed, Conwy county, pays 90p a unit on his 12-month contract although prices have fallen to 30p a unit.

Hotel owner Elyse Waddy, in Llandudno, faces paying £200,000 more when her three-year fixed tariff ends in July.

The industry body said energy was bought in advance and changes took time to reach customers.

Energy regulator Ofgem said it had written to suppliers to ask them to “show flexibility” with businesses locked into fixed-price contracts signed when prices were at their peak last year.

Mr Evans, operations director at the Royal Oak Hotel, said the fixed price electricity tariffs offered in October were a “shock to the system”.

Bill increases were about 400%, but the out-of-contract rate was even higher, so Mr Evans felt he had to sign up for 12 months as the six-month contracts had “disappeared”.

Mr Evans wants UK ministers to order energy suppliers to allow firms locked into fixed peak tariffs from last year to renegotiate their contracts.

He added: “We’re looking for the government to recognise that there was a dysfunctional market, and that between them and Ofgem, they allow us access to today’s prices.”

In April, the UK government scaled back its energy support for businesses.

Mr Evans said having already put up prices and introduced energy saving measures, there was not much more he could do to help pay the bills.

“We need hot water for our guests, we need the fridges on, we need the kitchen ventilation, we just can’t cut back on parts of the operation.”

Ms Waddy, who owns the Empire Hotel, said her gas bill was going to triple and her electricity would double when her contract ends in July.

She likened her experience to “playing poker” with utility companies that “have the power”.

Conservative MP for Aberconwy Robin Millar has launched a campaign in Parliament on the issue along with other MPs and hospitality trade bodies.

He accused energy suppliers of “anti-competitive behaviour”.

Energy UK, which represents energy companies, said: “It is important to bear in mind that, when contracts have been agreed and signed, energy is purchased at market rates on behalf of the customer.”

Ofgem acknowledged that the costs faced by businesses locked in fixed-term deals were “an enormous challenge”.

It added: “While as a regulator, we can’t unpick private contracts, we want to see commercially sensible solutions that help non-domestic customers, and we recently wrote to suppliers to ask them to show flexibility, and we will continue to press suppliers on this, while we review the regulation of the non-domestic market more broadly.”

The UK government said it had given businesses “unprecedented support” and was in regular discussions with them and Ofgem to ensure customers got a fair deal.

BBC

Nearly 1million households could be hit with energy bill hikes due to electricity meter switch off

OVER 820,000 households could see their energy bills climb if they don’t take action before an electricity meter switch off.

Customers at some of the UK’s biggest energy suppliers are still relying on these legacy devices, according to new data by Elexon.

Electricity meters that rely on the Radio Teleswicth Service (RTS) will stop functioning after March 31, 2024.

Hundreds of thousands of customers on Economy 7 and other multi-rate energy tariffs use these electricity meters, which charge customers cheaper rates depending on the time of day.

The devices rely on the Radio Teleswitch Service (RTS) which broadcasts a signal alongside the long-wave channel for BBC Radio 4.

This signal is then picked up by the meter and used to switch the electricity rates at different times of the day.

Some RTS electricity meters can also automatically turn heating and hot water systems on and off during certain hours.

However, the RTS signal will be switched off on March 31, 2024 and these meters will no longer function as intended.

From April next year, these meters could be left jammed on peak time electricity rates depending on when the RTS signal dies.

This could lead to huge bill hikes for households affected by the switch off. It could also leave those with heating systems controlled by RTS on or off permanently.

The number of customers still using RTS-controlled meters varies by firm.

But new data from Elexon, the company responsible for managing the electricity balancing and settlement system shows which firms have the most customers with the legacy device.

Over 100,000 customers at Eon Next, Octopus Energy (including Bulb) and Scottish Power still rely on RTS meters.

A further 50,000 customers at British Gas, EDF and Ovo Energy (including Boost and SSE) still rely on RTS meters.

The only way to avoid facing the issues expected to arise from the RTS switch off is for affected households to switch to a smart meter.

Customers that do so will still get access to muti-rate energy tariffs including Economy 7.

An Ofgem spokesperson said: “Suppliers have to make sure meters are safe and accurate, and this sometimes means replacing the meter. We expect suppliers to communicate clearly to their customers about this.”

However, if you don’t hear from your energy supplier, Energy UK recommends that customers get in touch to enquire about having one fitted.

The RTS was originally meant to be shut off back in 2014, but energy suppliers have been keeping the service on life support as they act to move their customers over to new meters.

With less than a year to go, Ofgem said in a letter to suppliers in April that it was still disappointed at the lack of progress in ensuring that these customers’ meters are exchanged for smart variants

Energy UK told The Sun, that while the switch off is still scheduled for March 2024, discussions with providers are already underway to extend the service into 2025.

The Sun

The energy fix is back as wholesale prices drop

Fixed energy deals are slowly making a comeback as supplier seek to tempt customers to lock in rates now that the wholesale cost of energy is falling.

British Gas, Eon, Ovo Energy and So Energy are offering fixed deals to existing customers that could work out the same or just above the regulator’s price cap over the next year.

Ofgem’s price cap limits the amount suppliers can charge per unit of gas and electricity and from July it is due to fall to what works out as an annual level of £2,074 for the average household paying by direct debit. It is the first drop in the cap since October 2021.

It used to be normal practice to shop around for the cheapest fixed energy tariffs but most suppliers stopped offering them when prices started spiralling in 2021, after pandemic restrictions were lifted and Russia invaded Ukraine.

In 2020 about 5.95 million people switched supplier, according to the trade association Energy UK. A year ago, there were just 15 fixed deals and they worked out at as much as £4,412 a year for average households, according to the comparison site Uswitch.

Martin Young, an energy analyst at the investment bank Investec, expects more suppliers to bring back deals from July. “We do not expect a deluge of cut-price deals though,” he said.

“Switching will be driven by customer service and innovative products. Uptake will depend on personal preference and exit charges.”

The consultancy Cornwall Insight expects Ofgem’s price cap to fall to what works out at an average of £1,976 a year from October then rise again to £2,045 from January.

A fixed deal would need to be at an average bill of £2,035 a year for you to be better off than staying on a variable tariff that tracks the price cap. The cheapest fix is the So Jasmine tariff from So Energy, which gives an average bill of £2,035 a year. It is available to a “limited number of existing customers”, and has a £150 exit fee if you change your mind.

British Gas’s fix gives an average bill of £2,044 a year with a £200 exit fee, and Eon Next’s one-year fix is £2,050 a year with a £150 exit fee.

The most accessible deal is a one-year fix at £2,220 from Ovo Energy. You can switch to its standard variable tariff and then fix straight away — you don’t need to have been an existing customer. The tariff also has a £150 exit fee.

Sara Williams, who runs the advice blog Debt Camel, said: “Some of the new deals are about the same as the July price cap, so they are not bad deals, and if you are risk-averse you may be happy to pay a bit more than the cap for the protection against future increases.

“Check what the exit fee is just in case you want to escape if energy prices fall — these charges are usually a fixed amount, so will matter less if you are a higher energy user.”

The Times

M5 motorists warned of overnight closures for pylon work

Drivers are being advised to plan their journeys as a stretch of the M5 is being closed overnight to allow new pylon cables to be installed.

It will be shut in both directions between junction 19, Clevedon, and junction 21, Portbury, from 22:00 BST to 05:00 BST on 10 and 11 June.

During the closure, scaffolding will be built to allow the wires to be put up.

The works are part of the Hinkley Connection Project, to connect Hinkley Point to the local energy grid.

A diversion will be in place along the A370 from Weston-super-Mare to Bristol for all traffic, and through Tickenham for lighter vehicles.

Bristol City Council’s Clean Air Zone charge will not be enforced while the diversions are in place.

Aden Precious, project manager on the Hinkley Connection Project said: “These closures are important to ensure the safety of all road users and our workers as we continue our work to construct this nationally significant low-carbon electricity infrastructure.

“We work closely with National Highways and local authorities to do all we can to minimise disruption and have planned these closures overnight when there is least traffic on the roads.”

BBC

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.