The agenda as utilities go ‘back to school’

As this summer’s silly season, dominated by ice bucket challenges, draws to a close, it’s time to knuckle down to the serious business of the autumn. MPs are back in Parliament, party conferences are fast approaching, and the finishing touches are being put to the regulatory settlements that will govern the next five or eight years – not to mention the competition inquiry that will reshape the energy supply sector. The Utility Week team gazed into its crystal ball and made some predictions for the closing months of 2014:

•    PR14 will be brought to a relatively painless close in December, with most water companies this week breathing a sigh of relief that they have finally reached draft determinations with no (more) surprises. That said, three companies are clearly in the naughty corner and United Utilities particularly has a long slog ahead. Meanwhile, the regulator has clearly signalled its wish to bring down the Wacc yet further in final determinations; the water companies seem resigned to their fate.

•    Frantic negotiations will continue behind the scenes between Ofgem and the power networks as RIIO-ED1 draws to a close in November. The networks are intent on clawing back some of the savings Ofgem is demanding, but the regulator will be loath to back down from its “Ofgem cuts energy bills” headlines – so any movement is likely to be small. Despite this, the networks will accept the settlements: with the political spotlight on network costs and certain suppliers trying to drag them into the CMA inquiry, a referral is the last thing they need.

•    In the supply market, the barriers to entry and competition for smaller suppliers will become the story, as Decc investigates the impact of exclusions from Eco and other social tariffs. Smaller suppliers such as Ovo will continue to benefit from the publicity, with customer switching on the rise.

•    All eyes on the big six this autumn with the $64,000 question: will they raise prices? It would seem an act of PR suicide to do so – but when has that bothered them? With next year’s potential price freeze on the horizon, prices certainly won’t be going down. We predict a mixture of responses from the big six, with the offer of early price freezes and other deals used to offset small price rises.

•    The Conservatives and Liberal Democrats will be looking to seize the political initiative from Labour on cost of living in this autumn’s party conference season. Brace yourselves: we could be in for another “Miliband moment”.