Blog: SEW’s retail strategy: sorted! Smart meter rollout: not sorted…

In her news editor’s blog for Utility Week, Lois Vallely rounds up some of the big stories of the week (or in this case, the month).

First and foremost, I would like to apologise for my extremely long break from this blog – I have no excuse. I know you all must be devastated, but you need not fear, for I have returned. And what a lot has happened while I’ve been away.

I’ve been to Perthshire in Scotland to visit Castle Water chief executive John Reynolds, in his castle, which was by far the most interesting and unusual interview location I have and probably will ever visit. You can read the full interview in the most recent issue (4 November).

I’ve also been up to Stoke-on-Trent to visit the brand new shiny offices of Water Plus, and to interview chief executive Sue Amies-King – interview to follow.

Anyway, on to the news.

I know the biggest story in energy is the (most recent) severe delay to DCC go-live, throwing the timetable for the smart meter rollout into doubt, and I’ll get to that. First, however, I wanted to clear up some confusion. Well I was confused anyway; I can’t speak for Utility Week readers.

This concerns South East Water’s strategy for the non-household retail market which opens in April next year.

The company applied for a sewerage licence only for its business retail arm South East Water Choice in August. This seemed like a strange decision at the time, because it would enable the water-only company to offer sewerage services to business customers nationwide, but water services within its existing water supply licence area only.

The company said at the time that Its reason for doing this was to enable it to offer its existing 55,000 business customers sewerage services as well as water.

Apparently under the amended Water Industry Act, water undertakers cannot hold a water supply and sewerage licence (WSSL). In order to apply for one, South East Water would have had to establish a separate company – as other water firms have done.

Was this an exit strategy? No, it appears not.

Last month, an unheard-of company Invicta Water applied to Ofwat for a WSSL and said it would trade as ‘Water Choice South East’.

This week I travelled to Snodland to speak to South East Water Choice managing director James Dubois. I mentioned to him the uncanny similarity in the names. With an amused smile, he told me Invicta Water was a subsidiary of South East Water – a dormant company through which it has applied for its WSSL. I suppose it’s obvious really, but for those of you who are as unobservant as me, now you know.

South East Water assures me it will not exit the market, but will take things one step at a time, and its focus will be on retaining its existing customers, keeping them from the clutches of Scottish retailers Business Stream and Castle Water, which both now have interests in the South of England.

Smart meter shambles

Now that I’ve cleared that up, in my own head at least, I can move on to the delay to the Data Communications Company (DCC) network. This was originally due to go live in December last year. It has since missed deadline after deadline and now it has now missed the most important deadline, meaning it has officially run over.

After relentless chasing by Utility Week reporter Saffron Johnson, a DCC spokesperson reluctantly admitted that the central IT system for the national smart meter rollout would not go live on 31 October as promised. The company declined to confirm a new launch date.

The industry was already concerned about meeting the stringent target for all homes to be offered a smart meter by 2020, it is now an ambition that looks virtually impossible.

No one has said much thus far, aside from the rather bland statements, the likes of which are often sent around events such as this.

“It is vital that the IT systems underpinning the roll-out are fully tested to ensure they are fit for purpose and we are working closely with the Data Communications Company to support them with this process.” – for example.

But this is not just any old delay. This time the DCC has overshot the official contingency period for launch, completely undermining smart meter rollout targets.

Consumer group Citizens Advice has warned that if these delays lead to a rise in the overall cost of the smart meter rollout, consumers could be forced to cover this extra cost through their bills.

What’s more, there is a distinct lack of transparency around the specific reasons for the delay.

This is serious.

Surely the Department for Business, Energy and Industrial Strategy cannot remain quiet on this forever.

Multi-utility trending

Meanwhile, a pan-utility trend which has emerged over the last few weeks is small business energy suppliers dipping their toes into the water market. Well, tentatively hovering their feet over the water market.

This started a while ago when Ecotricity chief executive Dale Vince told me the company may well look to offer an “eco approach to water”.

Since then, Regent Water – a subsidiary of gas supplier Regent Gas – has applied to Ofwat for a water supply and sewerage licence, and small energy suppliers, such as D-Energi, Corona Energy, BES Utilities and Yu Energy – have all express tentative interest, saying they are considering their options.

I also spoke to Business Stream chief executive Johanna Dow this week, and she told me the company has been considering a multi-utility offering for its customers.

The ambitious supplier, which bought Southern Water’s 105,000-strong business customer-base in June, has made no secret of the fact that it wants to increase its market share. It has approximately 90,000 business customers in the Scottish market, and is “focused on growth” in both markets.

She tells me: “As part of our review, we have been considering a multi-utility offering. I’m sure we are not alone in believing that there is customer demand for a bundled proposition and we’re keen to meet this demand. Watch this space!”

I would echo her sentiments.