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Change was definitely in the air this week as Ofwat published a series of discussion points that will help shape the industry in the next decade, and Centrica unveiled a billion pound strategy swing towards retail and away from its more traditional home in upstream gas and power.
Waters of change
We knew retail exit was coming, it was added at the last minute to the Water Act in 2014. We now know that water companies will be able to apply to exit the non-household retail market from October next year, under draft regulations published by Defra and the biggest shake-up in the sector since privatisation edges closer and becomes ever clearer.
With the near future becoming clearer, Ofwat has turned its sights slightly further forward by publishing a series of discussion points which could result in the sector undergoing numerous changes by 2020. Upstream reform and water trading are on the agenda once again, as are thoughts of setting stronger incentives in PR19.
There has also been a change in the long-standing dispute between Tata Steel and Welsh Water, which dates back to 2004. Ofwat has provisionally riled that Welsh Water needs to reduce its charge to the steel giant after the supplier tried to move Tata away from a tailored deal and onto a standard tariff 11 years ago.
Centrica’s remodelling
Centrica announced a billion pound strategy swing away from its upstream gas and power business, with its new focus being on core customer-facing activities. This move will see the company cut 6,000 jobs, although it is creating 2,000 new positions.
The move was not well received on the stock market, with shares taking a hit on Friday following the announcement, despite analyst views that its planned refocus is a step in the right direction.
The energy giant also revealed its non-domestic retail arm, British Gas Business, saw profits plummet by 95 per cent to just £3 million after a new billing system caused issues, raising costs and hitting customer service levels.
In with the new
Construction at the UK’s largest energy storage array began this week. The 10MW battery-based energy storage facility, is being built in Kilroot, Northern Ireland, and it is due to be operational by the end of the year.
Ovo Energy continued the theme of doing something new, by becoming the first energy supplier to unveil an app for the Apple Watch. The app allows customers to give meter readings via voice recognition and at-a-glance estimates of how much they’ve spent since their last bill.
New Lib Dem leader Tim Farron also named his new top team as the party tries to fightback from its election night disaster. Ex-MP Lynne Featherstone, who was deposed in May, is now the party’s energy and climate change spokesperson – leaving the Lib Dems without an energy voice in parliament. Baroness Parminter is the environment, food and rural affairs spokesperson.
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