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E.ON UK Sales and Profits Fall but Investment Continues to Increase

15 Aug 2014

E.ON has announced details of its half-year financial performance for January to June 2014.

E.ON UK Chief Executive, Tony Cocker, said:
“Our supply business has seen a £422 million decrease in sales when compared to the same period last year, which is primarily due to milder weather. Although parts of the UK faced widespread storms, the first six months were actually considerably warmer in comparison to the same period in 2013. This has meant customers have used less energy.

“This fall in demand has also had a direct impact on profits, with EBITDA decreasing by £85 million to £188 million. Despite this, we continue to invest significantly in our supply business and I’m pleased to say that in the first half of this year we have increased our investments to £33 million.

“This boost in investment has predominantly been in smart meter installations. We’ve now installed more than 330,000 meters in our customers’ homes, which will help them control their energy use. We’ve also further enhanced the level of our customer service through a wide range of programmes including upgrading our IT systems in order to provide our colleagues with the best available technology to support our customers.

“Our overarching goal is to keep making improvements to the services we offer our customers as we believe there’s always more that can be done. For example, we’ve noticed a massive increase in the number of customers wanting to access our online tools via their mobile devices. As well as ensuring the majority of our website is now accessible in this way, in January we also updated our ‘Best Deal For You’ service so customers can ensure they’re on our best tariff quickly, easily and wherever they are, through their mobile device.

“We’re also investing in new recruitment processes which we believe will help tackle the skills shortage within the sector, support the government’s youth unemployment agenda and deliver improved training and development for our colleagues. For instance, our industry leading Customer Service Apprenticeship scheme will give 16-24 year olds, who live in the local communities in which we operate, the opportunity to embark on a career in the energy industry. This innovative scheme will also help us build on the progress we have already made in improving our services for our customers.

“We want to ensure that we’re playing our part in restoring confidence in the industry and are therefore pleased that the energy market has been referred to the Competition and Markets Authority (CMA) – something we first called for back in 2011. We feel that through our own actions, and the CMA investigation, we can take another step towards becoming our customers’ trusted energy partner.”

Commenting on the results across E.ON’s other activities in the UK, Tony Cocker said: “EBITDA has increased by £49 million when compared to the same period last year, following increased production in our upstream oil and gas activities. However, our fossil fleet continues to experience difficult market conditions and increasing regulatory costs which have significantly affected turnover for the first half of the year.

“Despite this we continue to invest large sums in new and existing projects throughout the UK. For example, our £120 million Blackburn Meadows biomass facility has recently generated electricity and synchronised with the local distribution network for the first time. Also, earlier this month we opened our £4 million Humber Gateway Offshore Wind Farm Operations and Maintenance base which will support the current construction stage and day-to-day running of the 219MW site. Once completed, the wind farm will produce enough energy to power around 170,000 homes.”

“This investment in a mix of generation assets will help ensure future security of supply and help create an energy infrastructure in the UK of which we can all be proud.”

Story appears courtesy of E.ON


SSE Acquires Energy Solutions Group for £66 Million

12 Aug 2014

SSE plc has completed the acquisition of The Energy Solutions Group Topco Limited (ESG), a Manchester-based designer and provider of energy management solutions, from Bridgepoint Development Capital, for an enterprise value and total cash consideration of £66m with the potential for a further £6m if agreed targets are achieved.

ESG has traded for almost 20 years and employs around 340 people. It works with private and public sector customers to identify improvements in their management of energy consumption; and to install, maintain and support building management systems and solutions that support this. ESG can typically save its customers around 20% to 30% of their energy consumption.

The acquisition of ESG complements and enhances SSE’s services in competitive markets for industrial and commercial customers. As stated in SSE’s financial results statement in May, these services – including electrical and mechanical contracting, lighting services, private energy networks and telecoms – are being brought together in an ‘Enterprise’ division to meet the energy and related needs of such customers in an enhanced and co-ordinated way.

The existing management team at ESG will lead this business, which will continue to trade as The Energy Solutions Group. SSE believes that it will benefit from the commitment of the ESG management team and other employees to delivering effective energy management solutions for the benefit of customers and the environment. It is expected to earn annual operating profit of over £10m within five years, in addition to the commercial synergies that it will bring to SSE’s Enterprise division.

Jim McPhillimy, SSE’s Managing Director, Enterprise, said:
“Managing energy costs and environmental impact are big priorities for businesses and other organisations. As a responsible company focused on the long term, we believe it is in SSE’s interests to make the consumption of energy more sustainable. ESG is a leading provider of energy management solutions and these will be offered to SSE’s existing and potential new customers as part of a significantly increased presence in the growing business-to-business market for energy services.

“This market will be increasingly important in the next few years, and SSE’s programme to dispose of assets and businesses that are not core to its future plans is designed to enable the company to make a success of those opportunities which are, such as energy services. The disposal programme is well under way and we expect to report substantive progress in the autumn.”

Story appears courtesy of SSE.


Plans for Tough New Energy Market Manipulation Penalties

08 Aug 2014

New laws would give UK energy regulators new powers to prosecute people suspected of abusing the energy market. Anyone found guilty of rigging wholesale gas and electricity prices could face up to two years in jail under proposals being put forward by Energy and Climate Change Secretary Ed Davey.

These laws would give UK energy regulators new powers to prosecute people suspected of abusing the energy market.

Under the new laws, it would be a criminal offence to fix the price of energy at an artificial level or use insider information to buy or sell energy on the wholesale market. It would also be an offence to make misleading claims or conceal facts about wholesale energy prices to manipulate the market – especially if it could affect competition in the energy market.

The government wants to introduce these new sanctions to safeguard consumers from any unfair practices.

Ed Davey said:
“Manipulating the energy market is absolutely unacceptable, and these proposals provide a much stronger deterrent – more in line with the approach taken in the financial markets.

“The government is doing everything it can to help consumers by increasing market competition to drive prices down. We have also set up the first ever annual competition assessment, which has led to the first ever referral of the sector to the competition authorities.”

Under the current regulations, UK energy regulators can investigate and fine people found breaching the rules. Upgrading the most important rules to include criminal offences would mean people found to have broken them could also be sent to prison and a have a criminal record.

Introducing these criminal sanctions is part of the government’s reforms to the energy market to put consumers first. The government is breaking up the stranglehold of the Big Six, encouraging more competition and ensuring energy companies provide simpler tariffs. Last week the Competition and Markets Authority announced that it would carry out an investigation into competition and transparency in the retail energy market, which is crucial to rebuilding consumer trust.

Rachel Fletcher, senior partner, markets, Ofgem, said:
“Ofgem has a track record for taking strong action against companies that break the rules. And we want the strongest possible deterrents in place to guard against market manipulation and insider trading. We put forward the case to government for greater powers to take action if needed, and we welcome this consultation.”

Pending the consultation and Parliamentary process, the proposed new criminal sanctions could come into force in spring 2015.

Story appears courtesy of DECC.


Anglian Water’s Peter Simpson Joins Institute of Water Board as Vice President

07 Aug 2014

The Institute of Water has announced that Peter Simpson, Chief Executive Officer Anglian Water Group, has agreed to become Vice President.

Peter joined the Institute of Water as a Fellow Member in 2005 after becoming Chief Operating Officer, responsible for the day-to-day functioning of Anglian Water, covering operations, asset management and customer service. Prior to that Peter held positions within the international division of Anglian Water Group and has more than 25 years’ experience in the water industry.

In 2010 Peter declared his love of water in launching Anglian Water’s ‘Love Every Drop’ strategy which challenges us all to put water at the heart of a whole new way of living. At the same time, Peter was ensuring the people working in Anglian Water are suitably qualified and motivated through a ‘Licence to Operate’ training and development programme. This combination makes Peter an ideal candidate to be President of a professional body dedicated to inspiring and supporting people working in the UK water sector to reach their potential.

Lynn Cooper, Institute of Water Chief Executive, said:
“When Peter spoke at our Chartered Scientist launch at the event he hosted last December he was hugely complimentary about the Institute of Water; so much so you could have been forgiven for thinking he was President already.

“Peter is inspirational, has never lost touch with the people who work in and are served by our industry and, as a Chartered Environmentalist, is committed to raising awareness about how essential water is to life, people, the environment and the economy. It is a pleasure to welcome Peter to our Board of Directors.”

Peter will succeed Heidi Mottram, Chief Executive Northumbrian Water Ltd, as President at next year’s AGM ahead of the Annual Conference in Cambridge in June.

Peter Simpson said:
“I have been involved with the Institute of Water since joining the industry and have always held it in the highest regard. I look forward to playing a greater role during my time on the Board and as President.”

Story & Logo appear courtesy of The Institute of Water.


Institute of Water

Centrica Appoints Iain Conn as New Chief Executive

06 Aug 2014

Centrica plc has announced the appointment of Iain Conn as Chief Executive with effect from 1 January 2015, at which point he will join the Centrica plc Board. Iain will succeed Sam Laidlaw who will retire from the Board on 31 December 2014.

Iain will join from BP plc where he has been Chief Executive, Downstream, BP’s refining and marketing division, for the past seven years. In this role he is responsible for running BP’s customer-facing activities in the fuels, lubricants and petrochemicals sectors. This involves all manufacturing, supply, optimisation and marketing activities in support of both business and retail customers and includes shaping one of the world’s leading retail businesses, with 18,000 service stations in 70 countries, serving an estimated 12 million customers every day.

Iain has been a Board member of BP since 2004 and has previously held a number of senior roles throughout the business including in trading, exploration and production, and management of corporate functions such as safety and human resources.

Rick Haythornthwaite, Chairman of Centrica said:

“Sam has shown exceptional leadership over the past eight years. Under his stewardship Centrica has achieved strength and scale which is of great benefit to the UK as we secure the future energy needs of our customers in an increasingly international gas market. I would like to thank Sam on behalf of the Board, shareholders, customers and our people for his enormous commitment and contribution to Centrica.”

“Iain will bring an impressive combination of experience to our business. He heads a global consumer brand familiar to millions of people and he also possesses a deep understanding of the energy sector built up over a lifetime in the industry. His breadth of knowledge and commitment to customers and safety make him ideally suited to lead Centrica in the next phase of its development.”

Sam Laidlaw, Chief Executive of Centrica said:

“It has been a privilege to lead Centrica at a time of huge change in global energy markets, with all the challenges we face in terms of affordability, security of supply and the need to reduce carbon emissions. My aim has always been to help create a leading integrated energy company capable of meeting those demands while keeping customers and the communities we serve at the heart of what we do. Much remains to be done in the rest of the year but I am enormously appreciative of the unstinting work and support of my 37,000 colleagues who all contribute to Centrica’s success.”

Iain Conn, Chief Executive Designate of Centrica said:

“I am excited to be joining Centrica, a company which is leading the way in the provision of secure and reliable energy and services to customers in the UK and North America. Centrica also has a major responsibility for long-term energy supplies, particularly for the UK. I recognise the challenges which we face in rebuilding customer trust in the sector and helping to create an effective and sustainable approach to energy markets. I look forward to playing my part, along with all of Centrica’s people, in striving to achieve these goals.”

Upon appointment, Iain will also become Chairman of the Executive and Disclosure Committees and a member of the Corporate Responsibility Committee.

Story appears courtesy of Centrica.



Ofgem Sets New Rules to Help Businesses Compare Energy Prices

05 Aug 2014

Ofgem is proposing new rules to give further help to Britain’s smallest businesses – around 1.6 million customers – when they are shopping around for energy deals.

The rules will require suppliers to make price comparisons easier by including the price of the customer’s current deal, as well the new rates that their supplier will charge after the end of the current contract.

Suppliers must also tell each business how much energy it uses annually, so that they have all the information they need to compare their supplier’s prices with the rest of the market. This puts customers in the best possible position for negotiating a new deal when their current contract ends.

And all suppliers will have to use a standard 30 day notice period, so businesses know when to tell their supplier that they want to switch.

Suppliers will also have to acknowledge all notices given by businesses to say they want to terminate their contract when their deal ends, within five working days of receipt.

Ofgem has published a statutory consultation on the expected legal wording of the rules. This is the final opportunity for stakeholders to comment on the changes. Ofgem will publish its final decision this autumn. Subject to the outcome of the consultation and provided there are no appeals by the industry to the Competition and Markets Authority, the 30 day notice period and requirements for acknowledging termination notices are expected to apply from 31 Dec 2014. We expect that the rules on price comparison and consumption will come into force in March 2015.

Ofgem has already brought in tough standards of conduct so businesses get fairer treatment from their supplier, or risk facing fines. Since March 2014 around 160,000 more small businesses have benefitted from Ofgem’s rules for supply to business, which ensures they get clearer information on their contracts. All bills for the smallest business also now have to show the contract end date, so customers are prompted to think about comparing the market. We will publish additional guidance for small businesses to help them manage the process of contract renewal.

Story appears courtesy of Ofgem.



Ofgem Announces £17 Billion for Electricity Network and Cuts Bills for Consumers

04 Aug 2014

Ofgem has set out its proposed price control settlements for five of the six companies that run Britain’s local electricity network, which transports energy into homes and businesses.

Ofgem’s proposals would see the network companies spend £17 billion to upgrade and maintain Britain’s local electricity network. At the same time, this part of the energy bill – which accounts for 8% of an annual dual fuel bill – will be on average £12 a year lower than it is today for the eight-year period of the control. These proposals are planned to come into effect in April 2015 and run until 2023.

Last November, Western Power Distribution was the only company to have its price control agreed early after Ofgem judged its business plan for the eight year period showed sufficient value for consumers. Ofgem returned five out of the six companies’ plans (UK Power Networks, Northern Power Grid, SP Energy Networks, SSE Power Distribution and Electricity North West) because they failed to deliver good enough value for consumers. Since then, £2.1 billion has been cut from the plans, with companies identifying £700 million of these savings and Ofgem disallowing a further £1.4 billion following analysis and benchmarking of costs.

In addition to requiring efficient investment, Ofgem challenged the companies to improve customer service and take a more active role in helping vulnerable customers. Companies have responded well and plan to improve the help to vulnerable customers for example during power cuts. Ofgem’s annual customer satisfaction survey focuses companies’ attention on this important area and poor performers will face financial penalties. Ofgem has also sharpened targets to help new customers, such as businesses, new renewable generation (including community plans) and housing developments, get connected to the network faster.

Dermot Nolan, Ofgem chief executive said: “As energy regulator, a core part of our role is to set price controls for these monopoly network companies.
This is the only part of the energy bill Ofgem directly controls and our plans today will deliver better customer service and efficient investment at a lower cost for the customer.

“Today’s announcement is all part of Ofgem’s consistent drive to get the best deal for consumers while maintaining a stable regulatory regime which attracts investment as cheaply as possible. Our approach has delivered over £80 billion of investment since 1990 which has seen reliability increase and power cuts fall by 30%. At the same time, total network costs are 17% below where they were 25 years ago and electricity distribution costs are 39% lower.

“During the course of the price control there is expected to be an increased take up of low carbon technologies including heat pumps, solar panels and small-scale renewable generation. Ofgem’s regulation focuses companies’ attention on connecting these low carbon technologies in a timely and cost effective way, using smart solutions where appropriate.”

Smart solutions use real time information about the network and automation technology to make more efficient use of existing infrastructure. They also allow active management of consumption and generation patterns. These solutions can reduce the need for investment to accommodate new connections and mean that the network is more flexible to the changing patterns of consumption and generation.

With smart meters being rolled out to all homes and small businesses by 2020 the network companies will have access to much more information about the performance of their network which they can use to improve performance and increase efficiency.

Today’s proposals are now under consultation for the next eight weeks. Ofgem will publish the final decisions in November 2014.

Story appears courtesy of Ofgem.



Applications to the Green Deal Home Improvement Fund Close

29 Jul 2014

Due to overwhelming popular demand, the Green Deal Home Improvement Fund is closed for applications with immediate effect.

A surge in applications means the allocated budget has now been reached. All applications received prior to the fund closing that satisfy the terms and conditions and meet the eligibility criteria will be honoured at the original rates.

The Green Deal Home Improvement Fund was set up to help households in England and Wales improve the energy efficiency of their homes.

Parliamentary Under Secretary of State for Energy & Climate Change, Amber Rudd, said:

“The Green Deal Home Improvement Fund is a world first and in a short space of time it has proved extremely popular.

“We were always clear there was a budget which is why we encouraged people to act quickly.

“As a result, thousands more families will now benefit from Government help to have warmer homes which use less energy.”

Earlier last week DECC announced changes to the scheme, caused by the hugely positive response since its launch at the beginning of June.

The Department of Energy and Climate Change will monitor voucher redemption rates and will consider whether to launch a further offer should funds become available.

Story appears courtesy of DECC.



Boost for Business Energy Efficiency and Electricity Sector Investment

28 Jul 2014

Business, industry and other organisations will get help to cut their energy costs with £10 million available this year to improve efficiency and reduce energy demand.

Business, industry and other organisations will get help to cut their energy costs with £10 million available this year to improve efficiency and reduce energy demand, Energy and Climate Change Secretary Ed Davey announced today. He also unveiled new plans that will remove barriers to investment in energy infrastructure.

Mr Davey told the CBI’s Energy Conference that the energy sector had seen £45 billion of investment between January 2010 and December 2013, with nearly £8 billion investment in renewable technologies in 2013 alone, as he published the Government’s first report on energy investment in the UK.

This investment tackles a legacy of underinvestment and neglect in Britain’s energy sector that had threatened energy supplies. Instead, the investment won since 2010 will keep the lights on and build a low-carbon energy system that will support up to 250,000 jobs by 2020.

Energy and Climate Change Secretary Ed Davey said:
“Our plan is powering growth and jobs in the UK economy. We are building a secure, sustainable energy system for the future, dealing with an historic legacy of underinvestment and neglect that threatened to undermine the whole economy.

“The funds we invest now in keeping the lights on could, in the future, be available to support cheaper projects that deliver lasting reductions in peak electricity demand.

“I want to unlock the untapped potential of better efficiency in electricity use – so that more efficient kit can compete with building new power stations in the future. Our £20 million pilot will fund schemes that will help reduce our demand – not only saving businesses and their customers money, but reducing the amount of electricity we’ll need to generate.

“And by stripping away barriers to investment in our energy market, we’ll make attracting capital investment cheaper and easier – meaning real benefits for the British economy and British consumers.”

Mr Davey set out the details of the first £10 million Electricity Demand Reduction auction from a £20 million budget for the full pilot. Businesses will compete for funding for projects that reduce electricity demand, where projects would not have happened without the funding. The projects will save businesses money on electricity bills as well as cutting carbon emissions and demand on the National Grid. Expressions of interest open on 29 July.

Electrical efficiency could mean savings equivalent to 9% of total demand by 2030 – reducing the need for new power stations. The Government is testing whether projects that deliver lasting electricity savings at peak times, like replacing old light bulbs with LEDs or improving motors and pumps, could compete with generation, demand side response (DSR) and storage in the UK Capacity Market.

Over 300 organisations as diverse as hospitals, airports and supermarket chains have already come forward to indicate they are considering participating in the auction.

The Government also plans to remove unnecessary barriers to investment in infrastructure by amending the rules that prevent the same companies investing and exercising rights in both generation and transmission networks at the same time.

The Government will consult on changes to the rules that would give Ofgem the flexibility to decide whether problems would actually arise based on the facts, on a case by case basis, rather than having their hands tied. This means companies that want to invest right across Britain’s energy will be able to do so where there are no harmful consequences.

Mr Davey told the CBI that the changes were part of the Government’s strategy to create an energy secure, energy efficient economy.

The report shows that energy projects make up around 60% of the UK’s total infrastructure project pipeline – worth around £200 billion in its entirety. The UK remains one of the most attractive places in the world to invest in renewable energy, according to Ernst and Young, and is the best place in the world to in invest in offshore wind and marine power. Fifteen per cent of Britain’s electricity now comes from renewable sources.

The UK has one of the most secure energy systems in the world – ranked 4th by the US Chamber of Commerce. To further improve energy security and to deal with the problem of tightening electricity margins up to 2018, the Government has announced safeguards to ensure more electricity is available at peak times and to allow mothballed plants to be used if necessary.

Mr Davey has written to Ofgem informing them that we will be reviewing the implementation and enforcement of the Electricity and Gas (Internal Market) Regulations 2011. The new regulations are expected to come into force in early 2015 (subject to the will of Parliament).

Information on the Electricity Demand Reduction Pilot (EDR)
The EDR pilot is open to all sectors of the economy across Great Britain. It aims to test whether efficiency projects can compete in the forthcoming Capacity Market – and offers the chance to organisations to bid for funding for projects which will replace inefficient kit with new kit.

This has carbon, security of supply and cost benefits. Organisations can bid in for money for their savings in winter peak 2015/16 but they’ll save money whenever they’re using the new kit. The pilot will run for two years and will help us decide how to design an enduring scheme.

We’re looking for anyone with projects that can deliver at least 100 kilowatts of savings throughout the winter peak. We’ve already heard from retail chains and banks, local councils, ports and airports who are interested in taking part.

Story appears courtesy of DECC


Ofwat Confirms Thames Water’s Package for Customers

23 July 2014

Ofwat has confirmed Thames Water’s agreement to pay a package worth £86 million to customers and the communities it serves,  following Ofwat’s investigation into the company’s misreporting of sewer flooding data in 2010.

Ofwat has published a notice imposing a nominal penalty of £1 on Thames Water after consulting on this action in June 2014.

Story appears courtesy of Ofwat.