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Scottish and Southern Energy Power Distribution Fined £750,000

03 May 2014

Ofgem found that SSEPD did not provide some customers with an offer to connect to the electricity network within the prescribed timescales. In recognition of these failures, the company has paid £750,000 to the Scottish Hydro Electric Community Trust, to assist customers with the cost of electricity connections in rural areas.

During routine monitoring, SSEPD and Ofgem found that between August 2010 and September 2013 SSEPD did not meet the deadline to make a connection offer to 200 customers. As part of their licence conditions, electricity distribution companies have a maximum of three months to make connection offers to customers and must have the appropriate resources in place to deliver their work.

SSEPD was fined £500,000 by Ofgem in 2011 for breaches of the same licence conditions. They committed, at that time, to putting systems in place avoid a similar situation but these systems have been shown to have flaws. Today’s higher payment takes into account the failure to fully rectify the 2011 breach and the subsequent repeat of the same breach.

As well as providing an essential service to consumers, timely and cost-effective connections to the distribution system enable economic growth and help to decarbonise the energy we use. For the next electricity distribution price control, RIIO-ED1, Ofgem has included a time to connect incentive for companies to speed up time between application and connection offer.

Sarah Harrison, Ofgem Senior Partner with responsibility for enforcement said: “We welcome SSEPD’s admission that it breached Ofgem rules.

“Today’s announcement sends a clear message to electricity distribution companies that they must help customers to connect to their network in a timely and efficient manner.”

Ofgem takes strong action when companies fail to comply with their licence conditions having issued over £100m fines since 2010.

Story appears courtesy of Ofgem.

Ofwat Publishes Draft Determinations for Northumbrian Water and Dŵr Cymru

02 Jun 2014

Ofwat has published draft determinations for Northumbrian Water and Dŵr Cymru as part of the 2014 price review. The draft determinations set out the proposed prices the companies can charge their customers for water and sewerage services from 2015-2020.

Under the current plans submitted, Dŵr Cymru will decrease customer bills by 5% in real terms over the next price control period 2015-2020 while investing more than £2.5 billion. Northumbrian Water will reduce customer bills by 2% over the five-year price control, with investment of £2.7 billion. This investment will maintain and improve services for customers and the environment.

Ofwat’s Chief Executive, Cathryn Ross, said: “We recognise that public trust and confidence is essential if water and sewerage companies are going to remain legitimate in the eyes of their customers. These draft determinations will help maintain and build that trust and confidence. Under this price review we have seen companies rising to the challenge and developing innovative and efficient solutions for their customers both now and in the future, and for the environment.”

Ofwat’s Chief Regulation Officer, Sonia Brown, said: “We have challenged and scrutinised the business plans Northumbrian and Dŵr Cymru submitted. Both companies are offering their customers improved outcomes at a more affordable price. We have identified a small number of areas where it has been necessary for us to intervene to protect customers’ interests. Overall we are committed to achieving the best possible outcome for customers from the PR14 process.”

Consultation on these draft determinations will close on 4 July, and representations from all stakeholders are welcome. South West Water and Affinity Water as “enhanced companies” received their draft determinations on 30 April. All other companies will receive their draft determinations in August 2014. Final determinations for all companies will be published in December 2014.

Story appears courtesy of Ofwat.

Centrica Director Chris Weston Resigns

29 May 2014

Centrica plc announces that Chris Weston, Director, Centrica plc and Managing Director, International Downstream has tendered his resignation in order to become CEO of Aggreko plc.

Chris is subject to 12 months’ notice and a further announcement will be made in due course regarding the timing of Chris’ departure and succession for the leadership of Centrica’s International Downstream business.

Sam Laidlaw, Chief Executive of Centrica, said: “Chris has made an important contribution to Centrica over 11 years, leading a number of our businesses, in the UK and North America.  We will be sorry to see him leave, but recognise that Aggreko offers a great opportunity for him.”

Story appears courtesy of Centrica.

Ofgem Introduces New Framework to Encourage New Electricity Interconnectors

28 May 2014

Ofgem has published proposals for a new regulated approach to help more electricity interconnectors to be built.

Electricity interconnectors are cables that allow electricity to flow from one country to another. They enable countries to import power at times of shortage and export when in surplus. They can help to lower electricity supply prices and cut the cost of delivering security of supply. Britain already has four interconnectors, with a capacity of 4GW, but more interconnection is needed.

Under Ofgem’s proposed ‘cap and floor’ framework, developers will identify, propose and build interconnectors. Ofgem’s role is to assess, approve or reject individual plans and regulate how much money a developer can earn from operating an interconnector. Ofgem’s rigorous assessment process will evaluate consumer benefits to help ensure that only projects that are in consumers’ interests are approved.

If an interconnector plan is successful Ofgem will place a cap on the revenue the developer can earn. Anything above this cap is returned to consumers. Conversely, if their revenue falls below the floor then consumers top up developers’ revenue to the level of the floor. The level of the cap and floor will be specific to individual interconnectors and be determined by assessment of the efficient costs of developing and operating the interconnector. We expect to start considering applications in the autumn.

Martin Crouch, Senior Partner, Transmission, said: “The current market-led approach has not encouraged sufficient investment in interconnection with our neighbouring countries. We are proposing a regulated framework that will deliver crucial energy infrastructure at a fair price for consumers. This sits alongside a range of reforms aimed at increasing energy resilience in Britain, including increasing charges for suppliers and generators when they fail to meet customers’ energy needs.”

Ofgem has also announced reforms to strengthen incentives on generators and suppliers to ensure they generate or buy the right amount of power to meet customers’ needs. When they fail to do so, National Grid incurs costs in taking action to meet demand, and the generators or suppliers who cause the imbalance are charged for their errors. Ofgem has reviewed these charges – known as ‘cash-out’ – so that they better reflect the costs that National Grid incurs in dealing with these imbalances. Our reforms mean that generators and suppliers will face stronger incentives to deliver security of supply. Our reforms will support the efficient flow of energy through interconnectors, in particular incentivising in-flows during times of system stress.

Story appears courtesy of Ofgem.

ScottishPower Chairman Ignacio Galán awarded an Honorary CBE

27 May 2014

ScottishPower Chairman Ignacio Galán has been awarded an Honorary CBE by the Queen for services to UK-Spanish trade and investment links. ScottishPower parent Iberdrola has invested more than £4bn in the UK since it acquired ScottishPower in 2007.

Over the next two years, it expects to invest another £3.2bn, creating more than 4,500 new jobs in the process. Longer term, Iberdrola has investment plans for up to £15bn in the UK over the next 10 years, including major investments in the UK’s power transmission and distribution networks and offshore and onshore wind farms.

Ignacio Galán said: ‘I am delighted to have received this award, which is a recognition of the hard work of everyone in the Iberdrola Group and at ScottishPower since we joined forces in 2007. The UK has been the main destination of our investments in recent years and we are looking forward playing an important and productive part in the British economy over the long-term.’

Story and photo appear courtesy of ScottishPower.

Ofwat Consults on Commitments from Bristol Water

23 May 2014

Ofwat has opened a consultation on its intention to accept binding commitments from Bristol Water under the Competition Act 1998.

In March 2013, in response to two separate complaints, Ofwat launched a formal investigation into the price and non-price terms Bristol Water applied when providing services to self-lay organisations. These related to the services provided by Bristol Water to enable the provision of new water infrastructure for new development sites, either by itself or by self-lay organisations. The complainants alleged that Bristol Water had used its dominant position to harm competition in the contestable market of providing new water infrastructure for new developments, making it difficult for self-lay organisations to operate in Bristol Water’s area.

Bristol Water has offered to make changes to both its structure and processes in response to the specific competition concerns identified by Ofwat in this case. This includes a clearer separation of Bristol Water’s downstream developer services functions, which operate in a contestable market, from its non-contestable upstream services.

Ofwat considers that the case raises issues of strategic significance for the industry, given that services for new water connections infrastructure is currently one of only a few areas of competition in the water and sewerage industry. The level playing field issues raised by this case will grow in importance as more competition occurs in the sector as a result of the new Water Act 2014.

Ofwat’s consultation, which runs for eight weeks until 18 July 2014, seeks views from interested parties on the appropriateness of Ofwat accepting the commitments offered by Bristol Water.

Story appears courtesy of Ofwat.

Scottish Power to Pay £750,000 following Ofgem Investigation

Scottish Power has agreed to pay £750,000 to Energy Best Deal following Ofgem’s investigation into price differences between its standard credit and direct debit tariffs.

Under Ofgem rules, suppliers can only have different prices for different payment methods if the amount reflects the costs involved in supplying those accounts. These rules are designed to protect consumers and take into account that some payment methods are more expensive to administer than others. Ofgem’s investigation found that between September 2009 and December 2012 Scottish Power did not have a robust process in place to assess the costs associated with different payment types and set prices accordingly.

At the time our investigation opened, Scottish Power’s price differential between standard credit and direct debit payment methods was out of line with that of other suppliers. Since the investigation was launched, Scottish Power has significantly reduced its price differential.

Scottish Power has cooperated with Ofgem and has taken steps to ensure that it can comply in future. The size of the penalty reflects the scale of the breach and takes into account Scottish Power’s willingness to accept its failings and make payments that benefit consumers.

Sarah Harrison, Senior Partner in charge of enforcement at Ofgem said: “Suppliers need to clearly justify the different prices they set for different payment methods. In this instance, Scottish Power did not have a robust process in place when setting their prices to ensure that the difference between their tariffs complied with Ofgem’s rules. We’ve held them to account for this and they will now pay £750,000 to benefit Energy Best Deal.”

Story appears courtesy of Ofgem.


The Water Act receives Royal Assent

20 May 2014

The Water Act has received Royal Assent. Welcoming the Water Act, Cathryn Ross, Ofwat’s Chief Executive, said: “We warmly welcome the Water Act. The measures that the Government has brought in are good news for customers – including the environment – and the economy. They will mean better services for customers, more efficient use of water resources and greater resilience in the face of drought and population growth.”

“The reforms in the Act complement and support the changes we are making to the way we regulate. Together, the changes brought in by the Act and our changes to regulation will boost the UK economy by more than £4 billion.

“We look forward to working with customers, Government, companies, other regulators and NGOs to maximise these benefits.”

The Act should be welcomed by investors, as it provides opportunities for well-run water companies to outperform the proposed regulatory settlement under the 2014 price review.

Story appears courtesy of Ofwat.


Centrica and QPI to Acquire Further Gas Assets in Canada

19 May 2014

CQ Energy Canada Partnership (CQE), the joint venture between Centrica Plc. and Qatar Petroleum International (“QPI”), has agreed to acquire a package of natural gas assets in the Foothills region of Alberta from Shell Canada Energy for C$50 million (£27 million).

As part of the transaction Shell will also receive CQE’s interest in the Burnt Timber gas processing plant and its interest in the Waterton undeveloped lands in South West Alberta.

CQE estimates that the assets to be acquired have 2P reserves of 90bcfe and will increase the partnership’s production in the region by approximately 24mmcfe/d.

Story appears courtesy of Centrica.

Npower Fined for Data Reporting Error by Ofgem

19 May 2014

Ofgem has today announced a £125,000 fine for npower, after they were found to have made an error in reporting data relating to the Government’s Feed-in Tariff (FIT) and Renewables Obligation (RO) schemes.

The size of today’s penalty takes into account that npower has already voluntarily forfeited Renewable Obligations Certificates valued at £896,900 (including interest at 5.5% per annum on the amount) and will make a late payment of £63,000 to account for the FIT reporting error. These steps will address the market impact caused by the reporting error.

Under the RO, electricity suppliers are required to obtain a proportion of electricity supplied to British customers from renewable sources. Under the FIT scheme, suppliers are required to provide an incentive to small-scale generators of renewable energy in the form of FITs payments. Ofgem administers these schemes on behalf of the Government and requires suppliers to provide accurate supply data to determine their obligations under the RO and contribution to the FITs payments fund based on market share.

The reporting errors were due to incorrect information being used by npower to calculate the amount of electricity supplied to customers. This resulted in npower underreporting these amounts by 0.08% in 2010-11 and by 0.28% in 2011-12. npower identified and reported the error to Ofgem, and also took steps to prevent this from reoccurring. The error was not repeated in 2012/13.

Story appears courtesy of Ofgem.