Archive for the ‘Regulatory Update’ Category
Delivering Investment, Low Carbon Supplies and Consumer Value post the Cave, Water and Power Price Reviews
The 2010 seminar marked the half way point for the review of regulation of Great Britain’s energy networks (RPI-X@20). Together with ‘Project Discovery’, the conclusion of PR09 and DPCR5 in water and electricity respectively, this year’s event promised and delivered a comprehensive regulatory update. The 150 plus delegates heard from a range of speakers including Ofgem and Ofwat, regulated companies, professional advisors and academics at the forefront of thinking and policy development in the regulatory arena.
- Alistair Buchanan delivers keynote address
The Wider Policy Issues
Exactly 12 months ago, at last year’s event, Ofgem Chief Executive, Alistair Buchanan, launched their ‘Project Discovery’. This year he shared findings with delegates.
The project has identified five key issues. Although each of real significance, it is their combination that causes Ofgem the greatest concern he told delegates:
1) The need for unprecedented levels of investment to be sustained over many years in difficult financial conditions and against a background of increased risk and uncertainty (up to £200bn of investment required by 2020).
2) The uncertainty in future carbon prices is likely to delay or deter investment in low carbon technology and lead to greater decarbonisation costs in the future (significantly higher emissions or reduced capacity margins).
3) Short term price signals at times of system stress do not fully reflect the value that customers place on supply security which may mean that the incentives to make additional peak energy supplies available and to invest in peaking capacity are not strong enough (greatest risk in scenarios with high gas imports and wind generation).
4) Interdependence with international markets exposes GB to a range of additional risks that may undermine GB security of supply (greatest risk in scenarios with highest gas import dependence).
5) The higher cost of gas and electricity may mean that increasing numbers of consumers are not able to afford adequate levels of energy to meet their requirements and that the competitiveness of industry and business is affected (consumer bills could rise by up to 60%).
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