Standard content for Members only
To continue reading this article, please login to your Utility Week account, Start 14 day trial or Become a member.
If your organisation already has a corporate membership and you haven’t activated it simply follow the register link below. Check here.
Brace yourself on Tuesday for the first hearing of the select committee inquiry into network costs. Basil Scarsella, the lone representative from the network side of the debate, is set to share a panel with British Gas – the very company that caused network bosses to turn the air blue with its “back of the fag packet” calculation that Ofgem could slice £500 million off network costs in ED1.
Unsurprisingly, networks beg to differ – and no doubt Scarsella will make the case eloquently. But you can’t help but feel the game is rigged. Look at the line-up: three suppliers, who have a vested interest in bashing networks on costs, compared with just one distribution network operator. The select committee will argue that other network companies will get their say later in the inquiry – but not before some headline-grabbing political theatre has been played out in their absence.
No-one’s saying DNOs shouldn’t be called to account. Given the current scrutiny on rising energy costs, it is right and proper they should. And the companies don’t always help themselves – they have had years to fix competition in connections, and their continued failure to do so speaks of an institutional struggle when it comes to culture change. Communications, as we know, is another area they frequently fall down on.
So questions should be asked. But there are two problems with this inquiry. First, there is a widespread lack of understanding of the degree of regulatory scrutiny networks already face. Since privatisation, networks have been heavily incentivised to take cost out of their business through the RPI-X price-setting process. That fact is lost in the heated rhetoric, and misunderstood by those who confuse Ofgem’s limited powers and subsequent timidity in the retail market with its much heavier hand on networks.
Second, some members of the committee seem to have already made up their mind. Chairman Tim Yeo raised eyebrows at a recent conference with comments that seemed to pre-empt the findings of the inquiry. He told Utility Week as far back as February that he believed network costs needed to come down, and he had already told the prime minister so.
Let us hope that when it comes to the hearings, the committee is willing to listen as well as talk.
Please login or Register to leave a comment.