0344 770 2345 info@businessutilitiesuk.co.uk URGENT: All businesses in the hospitality sector

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Britain to be left with just one coal power plant by end of next year

Britain will be left with just one coal-burning power station by the end of next year – bringing the country closer to its goal of ending use of the fossil fuel in electricity generation by 2024.

French energy company EDF announcedplans on Monday to close its coal power plant in Nottinghamshire, which is called West Burton A, by September next year.

This will leave a second Nottinghamshire plant owned by the German energy company Uniper as the only station still burning coal for power in Britain by the end of 2022.

Matt Sykes, EDF’s managing director for the generation business, said in a statement: “West Burton A and its loyal workforce have played a critical role providing power to the UK for 55 years, including during this recent winter. Since 1966, the station has produced enough electricity to meet the needs of all UK households for more than four years, a truly incredible achievement.

“With EDF’s power generation strategy firmly focused on nuclear and renewables – and in this key year for UK leadership on climate change – we now believe it is the right time to provide clarity to our employees and all those connected to the site.”

 

 

The government has set out a blueprint to switch 20TWh of the UK industry’s energy supply from fossil fuel sources to low carbon alternatives, as part of its £1 billion Industrial Decarbonisation Strategy. To “kick start” this transition, the energy secretary today announced that £171 million from the Industrial Decarbonisation Challenge has been allocated to nine green tech projects around Britain. Additionally, £932 million has been directed to 429 projects across England as part of the Public Sector Decarbonisation Scheme, which will fund low carbon heating systems such as heat pumps as well as technologies such as rooftop solar. The final key part of the government’s strategy revolves around new measuring rules for energy and carbon performance for commercial and industrial buildings in England and Wales. These could save businesses around £2 billion annually on energy costs by 2030, as well as reducing carbon emissions by 10%, or 2 million tonnes, according to the Department for Business, Energy and Industrial Strategy (BEIS). Energy secretary Kwasi Kwarteng said that the strategy showed the UK is “taking steps to be the first major economy to have its own low carbon industrial sector”. “While reaching our climate targets will require extensive change across our economy, we must do so in a way that protects jobs, creates new industries and attracts inward investment – without pushing emissions and business abroad. “Ahead of COP26, the UK is showing the world how we can cut emissions, create jobs and unleash private investment and economic growth. Today’s strategy builds on this winning formula as we transition low carbon and renewable energy sources, while supporting the competitiveness of Britain’s industrial base.” Green tech winners: The hydrogen and CCS industrial clusters The nine projects receiving a cut of the £171 million Industrial Decarbonisation Fund focus predominantly on hydrogen and carbon capture and storage (CCS). This builds on the National Infrastructure Strategy announced last November, which also had hydrogen and CCS at its core. In Merseyside, HyNet North West will receive almost £33 million funding for 2 projects that look at capturing and storing carbon emissions from the operations of a low carbon industrial cluster and creating a hydrogen economy in the North West. This will include repurposing old oil and gas facilities in the area for the transport and storage of carbon. It will reduce carbon dioxide emissions by a million tonnes a year from 2025, which will the increase to 10 million tonnes by 2030 and beyond. Local homes and businesses will benefit from green energy through blending hydrogen with natural gas. “This is a once-in-a-generation moment to effect real change,” said Steve Fraser, CEO of Cadent, one of the consortium partners in HyNet. “Replacing fossil gas with hydrogen will achieve incredible carbon savings, create thousands of jobs and position the North West as a world-leader in this technology. Cadent and the whole HyNet consortium is determined to make that happen.” Beyond HyNet, Scotland’s Net Zero Infrastructure project based in St Fergus in Aberdeenshire has received over £31 million to conduct offshore and onshore engineering studies focused on accessing safe carbon storage resources in rock deep below the North Sea. The Net Zero Teesside and the Northern Endurance Partnership is to get over £52 million for two projects set to decarbonise the Teeside industrial cluster in the mid-2020s. This will include both a world-first flexible gas power plant that uses CCUS, as well as offshore carbon transport and storage. These are set to capture around 2 million tonnes of CO2 annually from 2026 and decarbonise 750MW of power. Zero Carbon Humber will get over £21 million to turn the Humber region into a net zero cluster by 2040. It will include H2H Saltend, one of the world’s first at-scale low carbon hydrogen production plants, as well as CO2 and hydrogen pipelines. An addition £12 million will be awarded to project Humber Zero, which will create a CCS and hydrogen hub at Immingham, North East Lincolnshire. This will enable cost-effective and low carbon energy supply and storage, capable of providing services to National Grid. The final project is the South Wales Industrial Cluster, which is to receive nearly £20 million to create a decarbonised industrial zone that includes deployment of hydrogen and the development of CCUS. It will create a sustainable plan for the region, utilising CCS for cleaner electricity production alongside hydrogen-rich nature gas. Industrial Decarbonisation Challenge UK Research & Innovation challenge director, Bryony Livesey, said the £171 million funding is a “significant step” for largescale decarbonisation efforts, and they are “looking forward to working alongside the projects as they put their revolutionary plans into action”. “The benefits to these regional clusters will be substantial, both in terms of the environmental impact, as well as the opportunity for jobs and increasing the global competitiveness of industry in the areas. It once again demonstrates the UK’s industry as being at the forefront of innovation and creating greener solutions for the future.” Public Sector Decarbonisation Scheme: Solar and heat pumps key technologies BEIS has identified over 400 projects that will receive a cut of the £932 million allocated for the Public Sector Decarbonisation Scheme across four key areas. The scheme was first announced in October 2020, when the government stated £1 billion of grant funding would be made available for heat decarbonisation and energy efficiency measures across the public sector, central government departments and non-departmental public bodies. Greater Manchester Combined Authority is to received £78,236,986 for 15 bodies in the Greater Manchester public estate, including transport, fire and rescue services, police and the Royal Northern College of Music, as well as community buildings including 36 schools and 22 leisure centres. These buildings will see significant green upgrades including air source heat pumps and solar installations, along with new lighting systems. Leicester City Council will receive £24,253,008 to allow it to upgrade 93 buildings including 53 schools. Similarly, this will include replacing natural gas heating with air source heat pumps, installing solar panels and improving insulation. Hertfordshire County Council will use £24,007,737 to upgrade 182 council buildings, including 74 schools and 23 emergency service buildings. Heat pumps, battery storage and solar panels will be installed at the sites, along with energy efficiency improvements. Finally, Hull University Teaching Hospitals NHS Trust will use £12,640,760 to install solar panels, heat pumps and roof insulation. A mass replacement of lighting will also be undertaken, inefficient air compressors replaced and a new supply point to Castle Hill Hospital created. Carbon pricing, skills training and ‘Project Speed’ Beyond these key areas of funding, the Industrial Decarbonisation Strategy has a number of key commitments for government and business. The government will use carbon pricing as a tool to ensure industry take account of their emissions within key decisions. It will work to establish the right policy framework to ensure fuel switching is taken up by industry, while a targeted approach to mitigate against carbon leakage must be taken. New products standards will be developed to allow manufacturers to clearly distinguish their products as low carbon. The government will explore coordinated action on public procurement for green industrial products to help also drive down costs. The Infrastructure Delivery Taskforce, named ‘Project Speed’, will work to ensure land planning is fit for building low carbon infrastructure, and the Steel Council will help to set targets for near-zero emissions by 2035 to further help this buildout. The skills transition will be supported, to ensure the current and future workforce benefit from new green jobs, with up to 80,000 jobs over the next three decades expected to be created as part of the green industrial revolution. By following the pathway set out in the Industrial Decarbonisation Strategy, industrial emissions are expected to fall by two-thirds by 2035, and by at least 90% by 2050 on 2018 levels according to BEIS. Additionally, 3 megatons of CO2 are expected to be captured by 2030, compared to the minimal levels of today. “The Industrial Decarbonisation Strategy marks another vital step in the UK’s plans to achieve its net zero emissions target,” added CBI chief economist Rain Newton-Smith. “Creating and championing competitive low-carbon industries will ensure the benefits of a green economic recovery, and the longer-term transition to net zero, are shared across the whole country. “Ahead of COP26, this is a welcome demonstration of the UK’s commitment to act on climate change, to make our post-pandemic recovery a green one, and to give businesses the certainty they need to invest in the technologies of the future.”

February 2021 saw an 18% drop in energy switching, compared to the same period the year before.

That’s according to Energy UK’s figures, which suggest 457,447 customers moved to a new supplier last month.

That compares to a total of 559,000 customers that switched suppliers in February 2020.

The report shows in total, around 832,000 customers have switched electricity supplier so far this year, down by 17% compared to this time last year.

Emma Pinchbeck, Energy UK’s Chief Executive, said: “Like the hundreds of thousands already doing so every month, it’s worth spending a few minutes to check if you’re on the best deal or whether either by contacting your supplier or looking at other offers in the market you can save money on your energy bills.

“Customers should also see if their new supplier is signed up to the Energy Switch Guarantee so they can feel confident that their switch will be speedy and hassle-free.”

If you enjoyed this story you can sign up to our weekly email for Energy Live News – and if you’re interested in hearing more about the journey to net zero by 2050, you can also sign up to the future Net Zero newsletter. 

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BEIS announces £1bn Industrial Decarbonisation Strategy with key focus on green tech

The government has set out a blueprint to switch 20TWh of the UK industry’s energy supply from fossil fuel sources to low carbon alternatives, as part of its £1 billion Industrial Decarbonisation Strategy.

To “kick start” this transition, the energy secretary today announced that £171 million from the Industrial Decarbonisation Challenge has been allocated to nine green tech projects around Britain.

Additionally, £932 million has been directed to 429 projects across England as part of the Public Sector Decarbonisation Scheme, which will fund low carbon heating systems such as heat pumps as well as technologies such as rooftop solar.

The final key part of the government’s strategy revolves around new measuring rules for energy and carbon performance for commercial and industrial buildings in England and Wales. These could save businesses around £2 billion annually on energy costs by 2030, as well as reducing carbon emissions by 10%, or 2 million tonnes, according to the Department for Business, Energy and Industrial Strategy (BEIS).

Energy secretary Kwasi Kwarteng said that the strategy showed the UK is “taking steps to be the first major economy to have its own low carbon industrial sector”.

“While reaching our climate targets will require extensive change across our economy, we must do so in a way that protects jobs, creates new industries and attracts inward investment – without pushing emissions and business abroad.

“Ahead of COP26, the UK is showing the world how we can cut emissions, create jobs and unleash private investment and economic growth. Today’s strategy builds on this winning formula as we transition low carbon and renewable energy sources, while supporting the competitiveness of Britain’s industrial base.”

Green tech winners: The hydrogen and CCS industrial clusters

The nine projects receiving a cut of the £171 million Industrial Decarbonisation Fund focus predominantly on hydrogen and carbon capture and storage (CCS). This builds on the National Infrastructure Strategy announced last November, which also had hydrogen and CCS at its core.

In Merseyside, HyNet North West will receive almost £33 million funding for 2 projects that look at capturing and storing carbon emissions from the operations of a low carbon industrial cluster and creating a hydrogen economy in the North West. This will include repurposing old oil and gas facilities in the area for the transport and storage of carbon.

It will reduce carbon dioxide emissions by a million tonnes a year from 2025, which will the increase to 10 million tonnes by 2030 and beyond. Local homes and businesses will benefit from green energy through blending hydrogen with natural gas.

“This is a once-in-a-generation moment to effect real change,” said Steve Fraser, CEO of Cadent, one of the consortium partners in HyNet.

“Replacing fossil gas with hydrogen will achieve incredible carbon savings, create thousands of jobs and position the North West as a world-leader in this technology. Cadent and the whole HyNet consortium is determined to make that happen.”

Beyond HyNet, Scotland’s Net Zero Infrastructure project based in St Fergus in Aberdeenshire has received over £31 million to conduct offshore and onshore engineering studies focused on accessing safe carbon storage resources in rock deep below the North Sea.

The Net Zero Teesside and the Northern Endurance Partnership is to get over £52 million for two projects set to decarbonise the Teeside industrial cluster in the mid-2020s. This will include both a world-first flexible gas power plant that uses CCUS, as well as offshore carbon transport and storage. These are set to capture around 2 million tonnes of CO2 annually from 2026 and decarbonise 750MW of power.

Zero Carbon Humber will get over £21 million to turn the Humber region into a net zero cluster by 2040. It will include H2H Saltend, one of the world’s first at-scale low carbon hydrogen production plants, as well as CO2 and hydrogen pipelines.

An addition £12 million will be awarded to project Humber Zero, which will create a CCS and hydrogen hub at Immingham, North East Lincolnshire. This will enable cost-effective and low carbon energy supply and storage, capable of providing services to National Grid.

The final project is the South Wales Industrial Cluster, which is to receive nearly £20 million to create a decarbonised industrial zone that includes deployment of hydrogen and the development of CCUS. It will create a sustainable plan for the region, utilising CCS for cleaner electricity production alongside hydrogen-rich nature gas.

Industrial Decarbonisation Challenge UK Research & Innovation challenge director, Bryony Livesey, said the £171 million funding is a “significant step” for largescale decarbonisation efforts, and they are “looking forward to working alongside the projects as they put their revolutionary plans into action”.

“The benefits to these regional clusters will be substantial, both in terms of the environmental impact, as well as the opportunity for jobs and increasing the global competitiveness of industry in the areas. It once again demonstrates the UK’s industry as being at the forefront of innovation and creating greener solutions for the future.”

Public Sector Decarbonisation Scheme: Solar and heat pumps key technologies

BEIS has identified over 400 projects that will receive a cut of the £932 million allocated for the Public Sector Decarbonisation Scheme across four key areas. The scheme was first announced in October 2020, when the government stated £1 billion of grant funding would be made available for heat decarbonisation and energy efficiency measures across the public sector, central government departments and non-departmental public bodies.

Greater Manchester Combined Authority is to received £78,236,986 for 15 bodies in the Greater Manchester public estate, including transport, fire and rescue services, police and the Royal Northern College of Music, as well as community buildings including 36 schools and 22 leisure centres.

These buildings will see significant green upgrades including air source heat pumps and solar installations, along with new lighting systems.

Leicester City Council will receive £24,253,008 to allow it to upgrade 93 buildings including 53 schools. Similarly, this will include replacing natural gas heating with air source heat pumps, installing solar panels and improving insulation.

Hertfordshire County Council will use £24,007,737 to upgrade 182 council buildings, including 74 schools and 23 emergency service buildings. Heat pumps, battery storage and solar panels will be installed at the sites, along with energy efficiency improvements.

Finally, Hull University Teaching Hospitals NHS Trust will use £12,640,760 to install solar panels, heat pumps and roof insulation. A mass replacement of lighting will also be undertaken, inefficient air compressors replaced and a new supply point to Castle Hill Hospital created.

Carbon pricing, skills training and ‘Project Speed’

Beyond these key areas of funding, the Industrial Decarbonisation Strategy has a number of key commitments for government and business. The government will use carbon pricing as a tool to ensure industry take account of their emissions within key decisions.

It will work to establish the right policy framework to ensure fuel switching is taken up by industry, while a targeted approach to mitigate against carbon leakage must be taken.

New products standards will be developed to allow manufacturers to clearly distinguish their products as low carbon. The government will explore coordinated action on public procurement for green industrial products to help also drive down costs.

The Infrastructure Delivery Taskforce, named ‘Project Speed’, will work to ensure land planning is fit for building low carbon infrastructure, and the Steel Council will help to set targets for near-zero emissions by 2035 to further help this buildout.

The skills transition will be supported, to ensure the current and future workforce benefit from new green jobs, with up to 80,000 jobs over the next three decades expected to be created as part of the green industrial revolution.

By following the pathway set out in the Industrial Decarbonisation Strategy, industrial emissions are expected to fall by two-thirds by 2035, and by at least 90% by 2050 on 2018 levels according to BEIS. Additionally, 3 megatons of CO2 are expected to be captured by 2030, compared to the minimal levels of today.

“The Industrial Decarbonisation Strategy marks another vital step in the UK’s plans to achieve its net zero emissions target,” added CBI chief economist Rain Newton-Smith.

“Creating and championing competitive low-carbon industries will ensure the benefits of a green economic recovery, and the longer-term transition to net zero, are shared across the whole country.

“Ahead of COP26, this is a welcome demonstration of the UK’s commitment to act on climate change, to make our post-pandemic recovery a green one, and to give businesses the certainty they need to invest in the technologies of the future.”

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Arrangements for the 2021 Gas Discretionary Reward Scheme (DRS) under RIIO-GD1

Publication date

12th March 2021
Information type

Policy area

This is our Guidance Document for the 2021 Gas Discretionary Reward Scheme (DRS) under the RIIO-GD1 price control.

The aim of the Gas DRS is to encourage gas distribution networks (GDNs) to undertake activities to help address a range of social, carbon monoxide (CO) safety and environmental issues.

Under the RIIO-GD1 arrangements, the Gas DRS will run every three years, with a maximum reward of £12m available across the GDNs, over the price control. The amount of the reward is determined by a panel.

The final RIIO-GD1 Gas DRS panel assessment will take place in 2021. The panel will assess performance between 2018-19 and 2020-21.

 

Energy-related products: call for evidence

Detail of outcome

The response to this call for evidence contributed to building the UK evidence base for energy-related products and will inform future policies which can contribute to greater carbon, energy, resource, and bills savings.

As announced in the Ten point plan for a green industrial revolution, the government will launch a policy framework for energy-related products later in 2021 where more detail will be set out on future policy and ambition.

Feedback received

Energy-related products: summary of responses to the call for evidence

Detail of feedback received

We received 74 responses to this call for evidence, from:

  • manufacturers
  • trade associations
  • members of the public
  • charities
  • NGOs
  • energy companies
  • water suppliers
  • consultancies
  • consumer groups

We have provided a summary of the responses to this call for evidence.

Original consultation

Summary

We’re seeking evidence to support our future UK products policy and our aim to achieve greater carbon savings.

This consultation ran from
 to 

Consultation description

Energy-related products are goods such as washing machines, lighting and televisions, which use energy or affect energy consumption when in use or in standby mode.

This call for evidence explores how effective policies for energy-related products in homes and businesses can support the UK’s transition to net zero by 2050. In particular, we are seeking evidence on:

  • how to improve the efficacy of ecodesign and energy labelling policy in the UK to realise greater energy and carbon savings as well as other environmental benefits of more resource efficient products
  • whether better minimum energy performance standards and resource efficiency requirements could be set for certain products
  • whether there are any other policy measures that could help to increase the uptake of energy and resource efficient products

Please do not send responses by post to the department at the moment as we may not be able to access them.

Read our consultation privacy notice.

Documents

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Decarbonising heat in homes inquiry hears from energy companies

The Business, Energy and Industrial Strategy Committee will question energy companies, including from Octopus Energy, Vaillant, Cadent Gas and E-ON, with experience of installing or trialling low carbon heating technologies in homes. This evidence session is part of the committee’s decarbonising heating in homes inquiry.

Witnesses

Tuesday 16 March

At 10.30am

  • Steve Keeton, Director of External Affairs, Vaillant Group UK Ltd
  • Greg Jackson, CEO and Founder, Octopus Energy
  • Michael Lewis, CEO, E-ON
  • Angie Needle, Director of Strategy, Cadent Gas

At 11.30am

  • David Renard, Chair, Local Government Associations’ Environment, Economy, Housing and Transport Board
  • Patrick Chauvin, Executive Director – Assets, Stonewater
  • George Day, Head of Markets, Policy and Regulation, Energy Systems Catapult
  • Randolph Brazier, Director of Innovation and Electricity Systems, Energy Networks Association

Purpose of the session

The evidence hearing is likely to explore issues around the barriers to delivering low carbon heating solutions to homes and how these can be best overcome.

They will also offer a perspective of the Government’s policies to encourage uptake of energy efficiency and low carbon heating in homes, particularly on the Green Homes Grant.

The Committee will also question organisations, including the Local Government Association, Stonewater (a housing association), the Energy Systems Catapult and the Energy Networks Association.

The panel will consider the suitability, and viability, of alternate heating technologies and their delivery in a variety of local-level situations, for example in different geographic areas, home ownership and different building types.

The session is also likely to explore questions around responsibilities for the coordination and delivery of low carbon heating on a local level.

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New UK rules will save Brits £75 a year on energy bills

The UK government said it will implement tighter rules for how much energy white goods like washing machines and fridges use, helping save Britons £75 ($104) a year on their energy bills.

The move comes at the same time as 15 million UK households are expected to see their energy bills rise more than £90 after Ofgem lifts the price cap in about three weeks’ time.

The new cap will come into force from 1 April this year. This means that for six months from April, the price cap will increase by £96 to £1,138 for 11 million customers on a standard dual-fuel energy tariff, and by £87 to £1,156 for 4 million prepayment meter users.

Meanwhile ministers are set to introduce “tough new rules” for electrical products to tackle ‘premature obsolescence’ — a short lifespan the government said is deliberately built into an appliance by manufacturers which leads to unnecessary and costly replacements for the consumer.

From this summer, manufacturers will be legally obliged to make spare parts for products available to consumers for the first time, so that electrical appliances can be fixed easily.

The move is expected to extend the lifespan of products by up to 10 years, “preventing appliances ending up on the scrap heap sooner than they should and reducing carbon emissions at the same time,” the Department for Business, Energy & Industrial Strategy said in a statement.

The UK generates around 1.5 million tonnes of electrical waste every year, it said.

The changes will set higher energy-efficiency standards for electrical products which will save consumers an average of £75 a year on energy bills.

They will also cut 8 mega tonnes of carbon emissions in 2021 by reducing the amount of energy products consume over their life-time.

Meanwhile, from 1 March, new energy labels have also been introduced which simplify the way energy efficiency is displayed on a new scale from A-G.

“Now the UK is an independent nation outside the EU, the EU emblem on energy efficiency labels has also been replaced with the Union Flag,” the government said.

Climate change minister Lord Callanan, noted that “the new energy labels we have introduced this week will help consumers make more informed decisions about how eco-friendly one smart TV or dishwasher is over another, helping us reduce our carbon footprint and build back greener.”

Head of International Collaboration at Energy Saving Trust, Emilie Carmichael, said: “Simplifying the way energy efficiency is displayed on labels will help consumers to make more informed choices to reduce their energy consumption and bills. Equally, every small step that consumers take in choosing the most efficient appliances will help the UK in reaching its net zero targets.”

In November last year prime minister Boris Johnson set out his ten point plan for a green industrial revolution.

Covering clean energy, transport, nature and innovative technologies, Johnson said his blueprint will allow the UK to eradicate its contribution to climate change by 2050, particularly crucial in the run up to the COP26 climate summit in Glasgow next year.

 

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Ofgem cuts electricity distributors returns by a third in green power push

Ofgem, the UK’s energy regulator, is to cut the profits that electricity distribution companies can make by a third as part of a new green-focused pricing regime.

The regulator said the new arrangements will boost investment to cut polluting greenhouse gas emissions from cars and unlock more flexible local grids.

Surface transport and domestic heating account for 34% of the UK’s greenhouse gas emissions, Ofgem said.

“The new price controls for the DNOs, known as RIIO-ED2, will significantly boost green investment to local networks and drive a major change in the way Britain travels, heats and powers its homes.”

Under the new pricing regime the UK’s 14 DNOs, which are companies such as SSE PLC (LON:SSE), will have the return (profit) allowed from their net assets reduced to 4.4% from 7% currently. DNOs are local monopolies that build and run the infrastructure that carries electricity to homes and businesses.

Revenues will be reduced from current levels, added the regulator, which would cut network charges on consumers bills by 9%.

Jonathan Brearley, Ofgem’s chief executive, said: “Our price control for local electricity networks paves the way for turning Britain’s streets green, unlocking the investment needed to support the UK, Scottish and Welsh Government climate change targets, particularly around the electrification of transport.

“At the same time, these financial arrangements will significantly cut investor returns to make sure consumers pay a fair price for energy whilst networks attract the investment they need to be safe and green.”

“The Price Control drives DNOs to be proactive in ensuring the local grids are ready to cut greenhouse gas emissions, as they are best placed to know where new investment is needed to accommodate increasing demands.”

Ofgem regulates the rate of return DNOs can make on investment, which ultimately is paid for through consumers’ bills.

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PN 06/21: COVID-19 and the business retail market – Ofwat consults on how to address increases in bad debt

Measures aimed at: combating the spread of Covid-19; and strengthening protections for Non-Household customers who are late paying their bills; could result in higher than expected levels of bad debt in the business retail market.

In April 2020 Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of Non-Household revenue, which it considered was the level of bad debt an efficient and prudent Retailer should have planned for.

Today Ofwat has signalled that, on the basis of available information, levels of bad debt across the market are likely to exceed this 2% threshold.

As a result Ofwat is consulting on amending the price caps, which apply to small and medium Non-Household customers who have not engaged in the market. Retailers will be expected to bear market-wide bad debt costs up to 2% in full. Ofwat proposes adjusting the price caps to enable market-wide bad debt costs in excess of 2% to be shared between Retailers and Non-Household customers.

Ofwat proposes to make an initial adjustment from April 2022, with a subsequent adjustment once more accurate information is available. Ofwat has made it clear that if bad debt costs turn out not to exceed the 2% threshold, it will unwind any additional protections implemented.

Ofwat’s consultation sets out the following preferred positions in relation to:

  • Timing – Ofwat proposes Retailers’ accounting estimates be used to estimate initial bad debt costs. A subsequent adjustment will be made once more accurate information is available.
  • Recovery mechanism – Ofwat proposes to make a market-wide, uniform uplift to price cap levels, giving Retailers additional freedom to adjust their prices in the light of increased bad debt costs.
  • Sharing factors – If market-wide bad debt costs exceed 2% Ofwat proposes the following sharing factors:
    • Outturn bad debt costs up to 3% – Retailers and Non-Household customers should each be expected to bear 50% of any market-wide bad debt costs in excess of 2%.
    • Outturn bad debt costs exceed 3% – Retailers should be expected to bear 25% of any market-wide bad debt costs in excess of 2% and Non-Household customers 75%.

Georgina Mills, Business Retail Market Director at Ofwat said:

‘These proposals are aimed at protecting the interests of Non-Household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19.

In doing so we want to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition. By setting out our proposals today we are also providing additional clarity to Retailers and their investors.’

ENDS

Notes to editors

  1. Bad Debt – Consultation
  2. Ofwat is seeking views and evidence from all interested stakeholders by 5pm Tuesday 6th April 2021.
  3. Maximum price restraints (i.e. price caps) relating to certain types of Non-Household customers on schemes of terms and conditions are set out in the Retail Exit Code.
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COP26 – Government should spell out how it will measure success at the UN Climate Change conference

The Government’s ambitions for the COP26 climate summit need to be clearer, says the Business, Energy and Industrial Strategy (BEIS) Committee in an interim report on Net Zero and COP26 published today.

The Committee notes that no details have yet been provided by Government on how success will be measured against each of its headline ambitions. The report recommends the Government set out a clear list of COP26 ambitions, with a set of accompanying measures of success.

Chair’s comments

Darren Jones, Chair of the Business, Energy and Industrial Strategy (BEIS) Committee said:

“COP26 this November must conclude with countries around the world setting out their road maps to delivering on the Paris Agreement targets set five years ago. The British Government must put sufficient resource behind these global negotiations to ensure that agreements are reached at COP26 which both commit and help each country to make the required changes.

“We have concluded that the current ‘themes’-based approach to COP26 is too broad, without clear measures for success, and that more focus needs to be given to the overriding necessity to agree deliverable policies that keep global temperature rises to as close to 1.5 degrees above pre-industrial levels as possible.”

The report notes that the success of COP26 will be dependent on effective diplomacy but that it remains unclear whether the COP26 Unit has been assigned a dedicated diplomatic team or the extent to which the diplomatic network is engaged in helping to achieve summit objectives.

The Committee’s interim report also makes recommendations, in the wake of Covid-19 and issues around differing vaccination roll-outs, to help ensure all countries, including those from developing countries, are able to fully participate at COP26 in November.

The report emphasises the need for the Government to show global leadership by taking decisive action on the UK’s domestic ambitions and recommends the Government accept in full the Climate Change Committee (CCC) sixth carbon budget advice (covering the period 2033–2037) and bring in the necessary secondary legislation as early as possible.

The BEIS Committee’s report follows up on key commitments made in the Committee’s evidence sessions (including with Alok Sharma, COP President, and Claire O’Neill, former COP President) and, in particular the COP26 President’s plans to engage with Parliament over the next nine months. The interim report also follows up on ongoing discussions around the UK delegation to COP26, covid-19 contingency measures and digital access to the summit, and on the UK Government’s intentions in relation to the sixth carbon budget.

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