Ministers urged to publish bailout plan for Thames Water as debt crunch looms
Ministers are being urged to lay out their contingency plans for Thames Water, as fears mount that the supplier’s potential collapse will cost taxpayers billions of pounds.
A group of MPs are pushing for the Department for Environment, Food and Rural Affairs to reveal details of “Project Timber”, the contingency plan drawn up by the Government in case of the utility giant’s failure.
Thames Water executives have valued its rescue package at £5bn in talks with the Government, it is understood.
Sarah Olney, the Liberal Democrat MP for Richmond Park who is leading the calls, said: “The public has a right to know what Ministers plan to do if this disastrous situation occurs.
“This Conservative government’s refusal to make their contingency plan in the event of Thames Water’s collapse public is nothing short of a cover-up.”
Ms Olney is pursuing a motion for a debate on the issue in the House of Commons. It comes as fears grow over a looming repayment of a £190m loan in April, which Thames Water bosses have previously said they do not have enough money to meet.
Tim Whittaker, associate director at research institute EDHECinfra, which has covered Thames extensively, said: “If this can’t be refinanced or the shareholders don’t inject more money, then there’s a very real risk Thames Water’s parent Kemble could be put into administration.”
Problems stem from a long-running debt crisis at Thames, which serves 15m customers across London and the South-East.
Kemble, which was set up to raise finance for Thames, is solely reliant on dividends to service its debts.
However, Ofwat is currently investigating whether a recent £37.5m dividend has breached licencing rules, which could prompt a heavy fine for the supplier.
Troubles at the supplier have spooked debt markets, prompting a sell-off of bonds that has left prices at record lows.
The value of a bond linked to Kemble has plunged to 37p in the pound, down from 89p a year ago.
A bondholder who exited his position in Kemble earlier this year said any investors who haven’t sold out are “heading straight for the meatgrinder”.
An Ofwat spokesman said: “Ofwat does not comment on speculation.
“Thames Water needs to continue to deliver on its turnaround plan to improve its operational and environmental performance. It is for the company to secure shareholder backing to improve its financial resilience.
“We will continue to closely monitor the company’s progress as they do so to protect customers’ interests.”
Thames Water and Defra declined to comment.
The Telegraph
Major update for 1.3million Shell Energy customers after huge takeover
OCTOPUS Energy has issued a major update for Shell Energy customers whose accounts are due to switch to the supplier.
The energy supplier, which is part of the “Big Six”, has revealed exactly when tens of thousands more Shell Energy customers will have their accounts moved over.
The supplier says that 750,000 ex-Shell Energy customers have already had their accounts switched.
The migration process began before Christmas, but a spokesperson has told The Sun that all 550,000 remaining customers will be moved to the parent brand by the end of April.
Until now, Octopus Energy hadn’t given a timescale for when it expects all Shell Energy customers to switch over.
Once this process is complete, the Shell Energy domestic energy brand will cease to exist, and all customers will have their gas and electricity managed directly by the Octopus brand instead.
Remaining Shell Energy customers will be told that their account is being moved via letter, email or on one of their upcoming bills.
The update will include all the important details about what to expect from the move.
You might’ve received this already. But if you haven’t, you don’t need to do anything or contact Octopus Energy.
It comes just months after Shell agreed to sell its domestic energy and broadband arm to the energy firm last September.
At the time, Shell Energy provided domestic gas, power, and broadband services to approximately two million customers.
Octopus Energy said there will be a smooth transition over to the firm and no disruption to a customer’s energy supply.
However, industry experts expected Octopus Energy to divest their telecoms base to another telecom provider at the time of Shell Energy’s sale.
And on February 7, Octopus Energy sold Shell Energy’s broadband arm to TalkTalk.
Around 480,000 Shell broadband customers will switch to TalkTalk in the coming months.
The acquisition of Shell Energy’s customer base has now catapulted Octopus Energy to become the UK’s second-largest energy supplier with 6.8 million customers.
The last major supplier to place its domestic arm up for sale was SSE back in 2019.
SSE Energy Services, which provided gas and electricity to 3.5million households, was acquired by Ovo Energy in January 2020.
Octopus Energy said in October 2022 that it would take on all 1.5million Bulb customers after the troubled energy supplier fell into administration back in November 2021.
At its peak, Bulb was the country’s seventh largest energy firm and provided gas and electricity tariffs to 1.7million households.
But it was the biggest provider to go under after several other smaller firms failed to stay afloat.
Unlike, the smaller suppliers which went bust with hundreds of thousands of customers, Bulb had over one million.
This meant that Ofgem couldn’t simply get another supplier to take on all its customers, as it has done with the 28 other firms that collapsed in 2021.
Instead, Bulb was placed into special administration – which meant that it was allowed to operate as normal and customers don’t need to do anything.
But in October 2022, Octopus announced a deal with the government to buy Bulb and take on its 1.5 million customers, backed by the Government.
The Sun
Government documents ‘blow gaping hole’ in its case for Cumbrian coalmine
Previously unseen documents have emerged that appear to contradict the government’s case for a new coalmine in Cumbria.
When Michael Gove, the levelling up secretary, approved plans to build the Woodhouse Colliery near Whitehaven in December 2022, he said the UK would need the coal in order to carry on making steel.
But the newly revealed documents, drafted around the same time at the then Department for Business, Energy and Industrial Strategy (BEIS), say the opposite. According to these papers, officials predict with “high certainty” that technology such as electric arc furnaces will lead to the successful decarbonisation of UK steel production by 2035.
“This new information blows a gaping hole in the government’s case for supporting the proposed Cumbria coalmine,” said Tony Bosworth of Friends of the Earth.
“When Michael Gove approved the mine 14 months ago, he claimed it was needed because there was huge uncertainty over UK steel’s ability to decarbonise over the next 15 years.
“Now we discover that at the same time, government officials had ‘high certainty’ about the industry’s move away from coal.”
The documents were disclosed to Friends of the Earth by the Department for Energy Security and Net Zero (DESNZ), the successor to BEIS, as part of legal action the environmental campaign group is taking against the government’s climate plan.
Written in preparation for the government’s 2023 carbon budget delivery plan, the “risk tables” analyse potential threats to the policies in the plan, published last March.
Setting a target for all steelmaking to be electrified by 2035, the document says: “We have high certainty in the delivery of this policy … due to the deliverability and confidence in steel-making decarbonisation technologies being considered which impact the majority of the emission reductions (such as using electric arc furnaces).”
Steel is made by putting iron ore or recycled scrap steel through an intense heating process. Traditionally this was done in coal-fired blast furnaces, but modern electric arc furnaces use a direct electrical current to create the high temperatures needed. Such technologies, which emit a fraction of the carbon of traditional coal-fired blast furnaces, “have been in use for decades and proven emissions savings”, the BEIS document says.
The position is at odds with that taken by Gove when he approved the new mine. In his letter granting planning permission, Gove said there was “no certainty” arc furnaces or any other alternative technologies would significantly alter steel production, and the UK needed a continuing supply of metallurgical coal for years to come.
“It is clear that the European and UK steel industry is currently reliant on a supply of suitable metallurgical coal, and further … whilst there is a prospect that this reliance may decrease in the UK and Europe over the lifetime of the development, the evidence suggests that there would still remain a market for the coal,” he said.
With an expected production capacity of about 2.8m tonnes of coal a year, the £165m Woodhouse Colliery would create 500 jobs locally, with advocates seeing it as a means of “levelling up” deprived parts of north-west England. But Gove overruled significant opposition to approve the mine, including from senior colleagues in his own party.
Sir Alok Sharma, the MP for Reading West, who was the president of Cop26, the UN climate summit, when it took place in Glasgow, described the mine as “a backward step”. Lord Deben, then the chair of the Climate Change Committee (CCC), called it “indefensible”. According to a projection by the CCC, the mine would add 400,000 tonnes of CO2 emissions every year.
The closure of the UK’s last remaining blast furnaces, British Steel’s site in Scunthorpe and Tata Steel’s in Port Talbot, have cast further doubts on the case for the mine. Both companies have said they want to upgrade to electric arc furnaces and the government has pledged at least £500m towards Tata Steel’s transition efforts, with similar levels of support expected for British Steel.
Bosworth said: “The confusion over the government’s policy on steel is astonishing. On the one hand the government claims the UK steel industry needs coal for decades to come, and on the other it is offering hundreds of millions of pounds of taxpayers’ money to help the industry rapidly decarbonise.
“This muddled government thinking has to stop. Ministers from every government department must accept that the steel industry is moving away from coal and withdraw support for this unnecessary and destructive mine. This would also help restore the UK’s global credibility on climate change.
“Ministers should put areas like west Cumbria at the heart of a green industrial strategy, create new jobs and business opportunities and put the region at the forefront of building the cleaner future we urgently need.”
Friends of the Earth is currently taking the government to court over the new mine. Gove’s Department for Levelling Up, Housing and Communities declined to comment, citing the continuing legal action. DESNZ did not respond to a request for comment.
The Guardian
Car industry demands Budget help to get electric vehicles back on track
Jeremy Hunt has been urged to get the transition to electric vehicles, also known as EVs, back on the road ahead of the Spring Budget next week.
Prime Minister Rishi Sunak announced a delay in September to the ban on sales of new petrol and diesel cars, arguing it was needed to retain public support for the switch to net zero.
The Society for Motor Manufacturers and Traders (SMMT) said on Friday (March 1) the delay has backfired, with sales lagging the levels anticipated before the Government’s delay.
Mr Sunak delayed the ban on new petrol and diesel cars from 2030 until 2035, with industry warning at the time it would damage investment.
The SMMT said Britain’s electric vehicle market was still the second largest in Europe by volume, but EV uptake was down 19 percent year on year in 2023 after incentives to boost sales ended.
The results of a survey carried out for the SMMT showed almost half of people interested in purchasing at EV plan to wait until after 2030 to switch. This compares to one in 10 last year.
About two-thirds of non-EV drivers said they would not be switching to an electric car any time soon in a survey published in February. The survey conducted by Refused Car Finance showed a number of customers said they would not consider buying an electric car as their next vehicle.
Out of the customers surveyed who already owned an EV, 66.7 percent said they were happy with their electric car purchase and petrol and diesel options made no sense to them anymore. In their opinion, the biggest selling point of their EV are low running costs, zero emissions and a better driving experience.
Mr Hunt has been urged by the SMMT to use the Budget on March 6 to “recharge” the EV market by taking three steps.
Firstly, the SMMT wants the 20 percent VAT rate applied to a new electric car to be slashed in half, arguing that such a move would save the average buyer £4,000 but only cost the Treasury less than the Plug-in Car Grant.
Under that scheme, types of low-emission vehicles such as motorcycles, moped and small vans were eligible for a Government grant to make them more affordable.
The SMMT also called for Vehicle Excise Duty to be reformed to prevent most electric vehicles being classed as an “expensive car” from 2025 when a new supplement is due to be introduced.
In its final suggestion, the SMMT should slash the VAT rate imposed at public charging points from 20 percent to five percent, in line with the rate levied on homes.
Mike Hawes, Chief Executive of the SMMT, told Sky News: “The Chancellor must end the perverse fiscal system that discourages drivers from moving away from fossil fuels and send a clear signal that the time to go electric is now.
“Success will see our economy powered up by zero emission mobility, delivering cleaner air, quieter roads and cheaper running costs, ending the uncertainty we are seeing amongst motorists.”
The Express
Dale Vince: ‘Money hasn’t changed me. It’s changed what I can do’
Floodwater threatens to swallow the road on the way to Dale Vince’s barge. February rains have turned the fields into yawning brown lakes; the winter here in Gloucestershire has been warmer than spring for weeks. We are meeting at his home on the River Avon just ten days after Labour abandoned its flagship pledge to spend £28 billion a year on green investment during its potential first term in office. If a climate U-turn and biblical floods are making me edgy as I board his houseboat, I’m expecting to find Vince in full despair.
The 62-year-old environmentalist and multimillionaire businessman was a new age traveller in the 1980s, when the state of the planet first began to worry him. In the early 1990s he rigged up a windmill on the roof of his camper van at the Glastonbury festival to see if it could charge mobile phones. It worked, so he built some more. In 1995 he founded Britain’s first renewable energy supplier, Ecotricity, was awarded an OBE nine years later, installed the motorway network’s first EV charging stations, and today is worth more than £100 million.
A vegan for decades, he bought his local football team, Forest Green Rovers, in Nailsworth — then in the Conference, one below the Football League — turning it into Britain’s first vegan club and taking it up to the heights of League One. Last season he became even more famous when the FA banned its players from wearing Just Stop Oil T-shirts for their warm-up. As the protest group’s most committed public champion from its inception, Vince donated more than £340,000 and defended its increasingly controversial tactics all over the media, from Question Time to TalkTV — until last autumn, when he decided to stop funding it.
“Anything that could feed the Tories’ culture war narrative is counterproductive,” he announced in October. “Protest cannot work.” Inspired by the “clear green water” between the government and opposition’s environmental policies in “the most important election in our lifetimes”, he said he had pivoted from Just Stop Oil to just getting people to vote. His friends in the group were shocked, but Vince had made up his mind. Having donated £1.5 million to Labour before the 2015 election, he plans to give the party a further £5 million to help it win the next one — a seventh of the £35 million party donation limit. Now that Labour has ditched its £28 billion pledge his protester friends are probably telling him he backed the wrong horse, so I ask if he fears they might be right.
“No, I’m completely relaxed about it.” He shrugs languidly. Had the party asked his advice, he says he would have told them: “Do whatever you have to do to win the election.” He continues: “For me, the most important thing is that Labour wins.” The party cancelled its pledge ostensibly because the public finances can no longer fund it, but chiefly to neutralise the Tory attack line that Labour cared less about the cost of living crisis than looking woke. But what good is winning, I ask, if government climate advisers now say Labour hasn’t a chance of reaching net zero by 2030.
“Do they?” He looks amused — and mildly bored. “What do they know? We can get to 100 per cent green electricity within five years, easily — without spending any public money at all.”
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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.