Weekend press: Energy bills unlikely to fall in medium term, Ofgem warns

The national papers over the long weekend featured pre-election promises and warnings for the energy and water sectors – with a focus on the future of North Sea oil in Labour’s policy. Ofgem warned bills won’t be getting cheaper, while Ofwat is understood to have said water companies won’t have cost rises approved in the draft determinations on 11 July.

Energy bills unlikely to fall in medium term, Ofgem warns

British energy bills are not expected to fall substantially over the decade partly due to the costs of building out the electricity network to support the shift to renewables, the chair of the energy regulator has warned.

Mark McAllister said in an interview with the Financial Times that Ofgem expects bills to be “relatively flat in the medium term”, adding that he backed more “targeted support” for households’ struggling with their energy bills.

Speaking before the general election was called last week, McAllister, who took up his role at Ofgem in November, said: “As we build in more and more renewables, we’re also building in the price, amortised over many years, of the networks as well.

“If we look at the forecasts for wholesale prices and then build on top of that the costs of the network going forward, I think we see something in our view that is relatively flat in the medium term,” he added.

The cap will have fallen more than 60 per cent since peaking in January 2023 at the height of the energy crisis caused by surging wholesale energy costs, fuelling inflation and a cost of living crisis.

Nonetheless, it remains above pre-crisis levels typically below £1,100, partly due to the costs of running and developing electricity and gas cables and pipes, which will account for £363 or 25 per cent of the July 2024 cap, compared to £254 in the summer of 2021.

The costs are inflation-linked, but will also factor in the investment needed to develop cables and pylons to cope with the rise of wind and solar farms, heat pumps and electric cars under the shift away from fossil fuels.

National Grid recently said it would invest £31bn in electricity networks over the next five years. Chief executive John Pettigrew noted a “single-digit pound” impact on network costs on bills would be offset by the wholesale cost benefits of building renewables.

McAllister has joined Ofgem at a crucial time, as the UK works towards its legally binding goal of net zero carbon emissions by 2050. The regulator has a mandate to support the government in meeting this goal, on top of its core role of protecting consumers. Ofgem needs to enable huge investment to overhaul the energy system, with McAllister stressing the benefits of developing “power that’s generated locally and we’ve got full control over” in the form of renewables.

“Not getting to net zero is not in the interest of consumers,” McAllister added. “The interests of consumers are not just prices. It’s prices, energy security, net zero. All three of them are needed to protect the population of this country.”

McAllister, who has worked in the oil and gas industry, has joined Ofgem as it tries to restore its reputation following criticism that it was too slow to act after 30 suppliers collapsed during the energy crisis.

He said he thought Ofgem’s measures to toughen oversight struck the right balance. But, he added, suppliers’ customer service was “not as good as it really ought to be” and the regulator needed to “sharpen up our enforcement timetable”.

He said that the price cap introduced in 2019, which imposes a limit on the unit rate of energy in default tariffs, had “done some good things in the past” but may not be the best mechanism for the future energy system.

“Expanding targeted support for consumers has got to be part of the solution,” he added. McAllister, former head of the Office for Nuclear Regulation, also warned of “a challenge towards the end of the decade” over electricity supply given the closure of ageing nuclear power stations and the delay to the Hinkley Point C plant being built in Somerset by the French state utility EDF.

“We’ve got to get new renewables built and get other sufficient capacity on to the system in terms of storage. So, yes, there is a challenge for us there,” he said. But he added: “We kept the lights on through the energy crisis; we will keep the lights on through this.

Financial  Times

Ofwat poised to refuse most suppliers’ requests for big price rises

Ofwat is poised to refuse most water companies’ requests to ratchet up consumer bills, with some getting as little as half of what they have asked for, the Guardian has learned.

The decision from the water watchdog for England and Wales, Ofwat, has been formally delayed until 11 July because of the general election. Its verdict, known as a draft determination, comes amid a growing crisis in the water sector.

Britain’s biggest water monopoly company, Thames Water, which serves more than 16million customers in the London and Thames Valley regions, faces nationalisation unless it can attract vast quantities of fresh capital. It has requested bill rises of 59% – after accounting for inflation – from the regulator.

These figures have been rejected by Ofwat based on the latest iteration of Thames’s business and turnaround plans. The documents were described as a “microwave job”, according to sources who have reviewed them. They include “fag-packet figures” and reflect a board whose members appear determined to “sit on a deckchair on the Titanic”, the same sources said.

Whitehall officials have been increasingly concerned about the politicisation of any nationalisation. The bulk of Thames’s £15bn debt would be pulled on the UK’s balance sheet under renationalisation plans seen by the Guardian, causing a headache for any government facing already straitened public finances.

Ofwat is taking advice from the investment bankers Lazard in a bid to avoid the “worst-case scenario” of Thames being pulled into the special administration regime. Lazard is tasked with finding a sweet spot where Thames Water is attractive for investors, but minimises the pressure on consumer bills, sources said.

The delay to the publication of the bill increases that companies will be allowed to impose on consumers will add to Thames’s challenges, sources at the supplier said. It will affect Thames’s ability to raise capital as it will struggle to offer a clear picture of its position to prospective investors, they added.

Southern Water has requested the highest increase in bills among the utility companies of 91% to £915 a year, while Wessex Water has requested a 50% increase to £822 a year. Thames Water’s is the second highest request for an increase in percentage terms, at 59% to £749, according to figures from the Consumer Council for Water.

Rothschild, another investment bank, is advising Thames. Rothschild also advised on the privatisation of Thames in 1989.

A Thames Water spokesperson said that any comment before the Ofwat draft decision was published was “premature”.

An Ofwat spokesperson said: “Thames Water is a business with a regulatory capital value of £19bn, £2.4bn of liquidity available, annual regulated revenue of £2bn and a new leadership team. They must continue to pursue all options to seek further equity. Safeguards are in place to ensure that services to customers are protected, regardless of issues faced by the shareholders.”

The Guardian

Election spells end of North Sea as Labour policies doom oil industry

The looming early election threatens the end of the North Sea oil industry, according to experts, with Labour’s threat to extend the Government’s windfall levy set to hasten the sector’s decline.

Analysts said a likely victory for Sir Keir Starmer would prompt operators to give up on British waters, meaning some of Britain’s biggest oil and gas reserves may never be recovered.

“If Labour deliver on their promises, the UK continental shelf is finished,” said Ashley Kelty, research director at Panmure Gordon, a leading investment bank.

The future of the North Sea oil industry was thrown into doubt in 2022 when the Government imposed a windfall levy on the profits from oil and gas production that took total tax to an eye-watering 75pc.

Labour has pledged to add another 3pc, along with banning new drilling and, perhaps most damaging of all, stripping offshore companies of the tax breaks they get when investing in new fields. The plans were confirmed by shadow chancellor Rachel Reeves at a meeting last week.

Many operators are already moving investments overseas, including Serica Energy, one of the top 10 UK producing oil and gas companies. It operates 11 fields producing the equivalent of 46,000 barrels of oil a day.

David Latin, Serica’s chairman, said: “Government policy for the UK upstream sector has been erratic for decades but it’s become even more arbitrary and short term. That’s forced us to focus more on finding investment opportunities overseas instead of the UK in order to be resilient against future unpredictable shifts in UK government policy.

“Analysis suggests that if Labour’s rumoured tax plans are implemented, investment in the UK oil and gas sector will be reduced by £20bn over the next 10 years, which would result in UK production being halved compared to what it would be otherwise.

“That lost production will just be imported. The result will be less UK jobs and tax revenues and higher global emissions.”

Another offshore operator, Kistos, said it had “walked away” from two recent offshore investment opportunities because of uncertainty over the next government’s plans.

Kistos has assets in Norway and the Netherlands as well as UK waters, and executive chairman Andrew Austin said it was now looking overseas for future investment.

He said: “We are not going to invest in UK waters under the current level of fiscal uncertainty. I have already walked away from two investment opportunities.”

If a Labour government were to carry out its pledge to ban new drilling, then the oil and gas in Cambo field, Britain’s biggest unlicensed resource, is likely to never be recovered. The controversial Cambo field has a potential yield of 200 million barrels.

This will be welcomed by many environmental groups, who argue that the UK should stop exploiting its own fossil fuel reserves because of climate change.

Others disagree, warning that the UK still gets 75pc of its total energy from oil and gas and shutting off its own supplies before there are low carbon replacements will just mean having to increase imports.

James Reid, a senior research analyst at Wood Mackenzie, said: “The UK will still need oil and gas to support its energy mix, even in a net zero world. If we don’t produce it domestically, we will need to increase our reliance on high-cost, emissions intensive supply from overseas, such as LNG imports.”

Labour’s plans will cause similar problems for many other companies, with analysts pointing to EnQuest’s proposals to drill the Bressay and Bentley fields 80 miles east of Shetland.

EnQuest is another top 10 company, producing about 44,000 barrels of oil a day. Bressay alone could yield 200-300 million barrels, putting it on a par with Cambo and Equinor’s giant Rosebank field.

All such projects cost billions of pounds and financing them involves calculating not just the costs of production but also the cost of financing. Banks generally raise interest rates when politicians threaten to increase taxes or remove tax breaks.

The Telegraph

Aberdeen oil jobs at risk as energy industry warns of ‘apocalyptic’ outlook

The UK’s energy sector is facing an “apocalyptic scenario” with firms considering quitting the country because of high taxes and the threat of banning new oil and gas drilling, the industry has warned.

One company has stalled a project worth £400 million that would have created hundreds of jobs in the northeast of Scotland, warning that it was just one of many on hold.

Industry confidence in UK activities has plunged to a record low, according to the 39th Energy Transition report from Aberdeen & Grampian Chamber of Commerce.

It highlighted the UK government’s windfall tax, which Jeremy Hunt, the chancellor, has extended by a year in a move that angered his Conservative colleagues.

Labour’s plans to ban all new licences for the North Sea has created further uncertainty and angst within the industry. The SNP has oscillated on its policies for the sector but the Scottish government has not reversed the policy of opposing new drilling brought in by Nicola Sturgeon.

The chamber of commerce warned that whichever party wins the election had 100 days to restore confidence or face losing investment worth £30 billion.

Its survey found there has been a sharp decline in work across production, exploration and renewables as investors await the outcome of the general election.

A recent report by Welligence, an oil and gas analyst, said that key UK offshore operators such as Harbour Energy, the UK’s largest oil and gas producer, and TotalEnergies had already cut back investment and others were now likely to follow.

The chamber’s energy transition survey, which is published on Monday and sponsored by KPMG and ETZ Ltd, found that tax, political environment and market stability were the three biggest concerns facing companies based in the UK energy sector.

Despite the oil price remaining more than $80 a barrel, confidence among companies working in the UK Continental Shelf (UKCS) is now lower than the financial crash and the pandemic when oil prices had slumped to about $16 a barrel.

The survey also found that UK-based companies are increasingly focusing their investment and resources in overseas projects and markets.

Francesco Mazzagatti, chief executive of Viaro Energy, said that the company invested in the UK in 2020 because the tax regime was stable but now “the principle [has] changed” and it was now “looking into other opportunities” in other parts of the world.

“We had a £400 million project, gas development, and we are delaying it because we don’t know what’s changed,” he said. “We had contracts ready for a Scottish yard to build the platform and we put everything on hold. It’s a £400 million project, hundreds of jobs in Scotland and everything is on hold.”

Mazzagatti said that Viaro told a partner in the project that the firm could not “take a risk on this investment because if the tax regime changes the economics will be negative”.

The Times

Thames Water pumped 14bn litres of sewage into river Thames in central London in 2023

Thames Water pumped 14.2bn litres of sewage into the river Thames in central London last year, according to data that highlights the quantity of effluent flowing from the pipes of the UK’s largest water company.

The figures, obtained under freedom of information laws, reveal for the first time the volume of sewage outflows into the section of the river covered by the £4.5bn Tideway Tunnel, which is due to open next year.

They also come days after Sir Chris Whitty, England’s chief medical officer, warned that sewage pollution in UK waters had become a “public health priority” that needed to “be taken seriously”.

Water companies are facing a growing backlash against sewage pollution, which has risen up the political agenda in marginal seats in the south of England that the Conservatives are seeking to retain in the election on July 4.

Thames Water, the UK’s biggest water provider by number of customers, says the Tideway Tunnel project, which began eight years ago, will significantly cut the amount of sewage leaked from its network.

While private water companies are obliged to monitor and report on the number of sewage overflow incidents, Thames Water has electronic devices that measure the quantity of effluent flowing into the part of the Thames that falls within the Tideway Tunnel area of central London.

These devices recorded at least 85.9bn litres of sewage being pumped into that part of the river between 2020 and 2023, according to freedom of information requests obtained by the Liberal Democrats over successive years. The latest, released this month, showed that 14.2bn litres of sewage entered the Thames at these sites last year.

Sarah Olney, Treasury spokesperson for the Lib Dems, said the outflows last year were “disgusting” and called for every combined sewage overflow pipe to be installed with monitors measuring volume and frequency.  The worst incident took place in October at Mogden in south-west London, where 558mn litres of sewage were discharged.

Thames Water said retrofitting the entire network with volume monitors would be “prohibitively expensive”. It said it had published plans to upgrade 250 sewage treatment works and sewers including a £100mn upgrade of the Mogden sewage treatment works and a £145mn upgrade of the Beckton sewage works.

“We regard all discharges as unacceptable and taking action to improve the health of rivers is a key focus for us,” the company said, adding that the Tideway Tunnel would capture 95 per cent of the volume of untreated sewage entering the tidal section of the river in a typical year once operational.

Financial Times

Offshore wind needs bigger subsidies, warns government adviser

State subsidies for new offshore wind projects may not be generous enough to drive the projects needed to achieve targets for boosting clean energy, a leading climate adviser to the government has warned.

Baroness Brown of Cambridge, chairwoman of the adaptation sub-committee of the Climate Change Committee, the independent non-departmental public body, said Britain had been “slow” and “not very clever” in its handling of offshore wind auctions.

The government has raised the so-called strike price, a guaranteed price that generators are paid for the power they produce, to £73 per megawatt-hour for this year’s auction and has set the budget at a record £800 million in the hope of attracting new offshore wind schemes.

Last year’s round failed to secure any bids to build new arrays. The strike price then was set at £44 per MWh, which wind farm developers said failed to account for the rapid inflationary increase in the cost of labour and equipment.

The government has set a target of increasing Britain’s offshore wind capacity to 50 gigawatts by 2030, up from about 15GW on the system at present.

However, the strike price available in this year’s auction may not be appealing enough to attract the scale and speed of investment needed to achieve those targets, Brown said. “I’m still worried that there are better deals elsewhere and there is only so much capacity in the offshore wind industry and it’s going to go where it sees the best opportunity.”

The lengthy track record and large scale of Britain’s installed base of offshore wind meant it was still an important market for developers, she said, “but I think we’ve seen the costs in the supply chain go up very significantly, we’ve still high interest rates around, so projects starting now are facing an increased cost of capital and increased supply chain costs.

Government needs to be a bit more generous and a bit more flexible.” She added that it was important there was “diversity” in zero carbon-generating technologies within the UK’s energy mix.

The former Professor Dame Julia King, 69, who became a peer in 2015, also sits on the board of Orsted, the world’s largest offshore wind developer, and is a senior adviser to Holtec Britain, one of six companies bidding in the government’s competition to build mini nuclear power plants in Britain.

“If we drive forward, for example, with offshore wind without getting without driving forward with storage and nuclear, if we drive forward on any one part, we could end up with a challenge,” she said.

The Times

How the climate establishment went to war over net zero jargon

To be an expert on the decades-long shift to green energy is to speak in a language alien to the rest of us.

Concepts such as Scope 3 emissions, carbon sinks and offsetting trip off the tongues of the evangelists behind the shift away from fossil fuels – much to the confusion of the public at a time when the green lobby is desperate for their support.

It is perhaps no surprise then that some insiders are demanding an end to the terminology of net zero. But the discussion over whether to dumb down the language of climate change has prompted a major rift in the UK’s climate establishment.

David Wright, the chief engineer of National Grid, denounced the phrase “net zero” for having little public recognition, suggesting it was green “jargon” that blocked understanding by businesses and the public. The criticisms – echoing those of Chris Stark, who just stepped down as chief executive of the Climate Change Committee – prompted an immediate angry reaction.

One leading Oxford University academic who helped pioneer the phrase suggested that abandoning it would confuse people even more

Mr Wright said it was crucial for the UK to cut its carbon emissions, but this would only be politically achievable if people understood why it was necessary.

“I think the words net zero do not resonate with the public – I think a lot of people don’t really understand what it means,” he told the New Statesman Energy and Climate Change conference earlier this month.

“I think we need to be really clear about the opportunities for the country associated with the energy transition, and we should use plain English to really get that over to tell people what it’s going to mean.”

Wright is one of the UK engineering community’s leading experts on climate change, setting National Grid’s engineering strategy and also advising the Government on the move to cleaner energy.

However, he said he was feeling growing impatience with the language used by climate change experts because it had become jargonistic and confusing.

“Net zero implies a trade off with choices,” he said. “We need to use plain English and we need to stop using this sort of jargon and admit this is a real issue.”

Abandoning the phrase could prove awkward for the Government, which last year expensively rebranded its energy and business department as the Department for Energy Security and Net Zero (Desnz).

It follows similar criticism by Mr Stark, who recently stepped down as chief executive of the Government’s Climate Change Committee – itself overseen by Desnz.

His objection to the phrase was different – suggesting it had become politicised and was being exploited by “populist culture warriors”.

He said in a recent interview that he would be “intensely relaxed” about dropping the term, adding: “Net zero has definitely become a slogan that I feel occasionally is now unhelpful, because it’s so associated with the campaigns against it.”

The concept of “net zero” arose from the work of the Intergovernmental Panel on Climate Change (IPCC) in a report published just over a decade ago.

It said humanity could not stop all greenhouse gas emissions so it would have to find ways of removing CO2 from the atmosphere as fast as it was emitted.

That idea was embodied in the 2015 Paris climate agreement which set a goal of “achieving a balance between anthropogenic emissions and removals by sinks of greenhouse gases in the second half of this century”.

“Net zero is not a perfect phrase,” said Simon Lewis, former director of corporate affairs at Vodafone, Centrica and NatWest, and ex-communications secretary to the late Queen, who now runs Lewis Advisors, a PR consultancy.

“But it is a term that is now broadly understood by the public to mean an overall and enduring reduction in carbon emissions.

“In communications terms, I think trying to introduce any new terminology now may confuse and dilute the message, which would ultimately be unhelpful.”

A Desnz spokesman said it had commissioned research to see how well people understood the phrase. “Achieving net zero is very much part of the public conversation, with research showing almost 90pc of people are aware of it.”

Those whose research actually prompted the phrase are mounting a powerful defence against ditching it – arguing that changing it would lead to even more confusion.

Myles Allen, professor of geosystem science at Oxford University, co-authored the IPCC research that led to the idea of net zero and strongly defends the phrase against attacks from what he calls the climate establishment.

“It would be a great idea to tighten up the definition of net zero so as to exclude the more creative offsetting schemes and carbon accounting wheezes. If we’re going to meet our climate goals, we have to stop fossil fuels from causing global warming before the world stops using fossil fuels. And the only way of doing that is net zero.”

The jargon may be alienating, but the climate lobby is not willing to let go of it just yet.

The Telegraph

The power plays behind National Grid’s easy-money cash call

“A nutless monkey could do your job,” studio mogul Les Grossman (played by Tom Cruise) tells his colleague in the 2008 film Tropic Thunder.

“Now go get drunk and take credit at all the parties.”

This sentiment mirrors how investment bankers sometimes feel when a rival lands a coveted mandate. A lot of capital markets work doesn’t require special skill to execute but can be extraordinarily lucrative for the lead underwriter.

Last Thursday, National Grid announced a colossal £7bn fully-underwritten rights issue to help fund a five-year, £60bn investment plan. This is massive: the biggest equity offering of the year and the largest in the UK since the Lloyd’s Bank 2009 rescue rights issue.  It also means a massive payout for the two lead banks, Barclays and JPMorgan, who stand to rake in up to £140mn in underwriting fees.

It is hard to overstate what a home run this deal has been: it’s practically unheard-of to earn a $90mn fee on a single equity offering, much less $4.5bn of league table credit.
The structure of the deal is straightforward — a fully-underwritten, deeply discounted rights issue. Shareholders get rights (on a 7-for-24 ratio) to buy new shares at a 35 per cent discount.

There’s nothing creative here; the deal is as plain vanilla as Robert Van Winkle. Barclays and JPMorgan guarantee the proceeds if there’s any shortfall.

No other bank is involved, and — in a break from UK rights issue norms — none of the offering is being sub-underwritten by institutional investors. The bankers at Barclays and JPMorgan have hit the jackpot, securing yuge fees for minimal risk.

Discussing the nearly disastrous Credit Suisse rights in late 2022, FTAV wrote: The vast majority of rights issues are anticlimaxes. As long as the shares stay well above the subscription price, shareholders have every incentive to exercise the right and buy shares at a discount.

And since the underwriting banks aren’t actually selling shares, there is none of the stress or uncertainty of collecting orders and building a book of investor demand, as there is in an IPO or share placement. ….  [A]  sizeable discount is why some investors disparage the fees that banks earn for underwriting as “money for old rope”: the underwriters are pocketing a fee for taking on the very remote risk of being stuck with shares.

Other banks will find the National Grid deal hard to swallow. Heads of investment banking will carry out ruthless stewards’ enquiries, especially if their banks had lent money to National Grid in anticipation of a big payday.

At least a dozen full-service investment banks could have underwritten this offering, and so there will be widespread frustration.

Lending banks weren’t the only party left out in the cold. Normally, up to 30-50 percent of a UK rights issue is sub-underwritten to UK shareholders who collect a roughly 1 per cent fee. Not here.

Barclays and JPMorgan were comfortable with the risk and didn’t want to share their fees with institutions. And National Grid didn’t insist on sub-underwriting, either. It’s worth asking why National Grid snubbed their lenders and shareholders to favour Barclays and JPMorgan to such an extreme.

But it probably doesn’t actually matter much that there was no sub-underwriting. Fund manager investment decisions aren’t driven by a sub-underwriting fee. The practice of paying sub-underwriters is largely a UK phenomenon and has long seemed anachronistic, a relic of a bygone era when the “UK Club’‘ of marquee fund managers held some sway.

This rights issue shows that the UK long-only investor community is now regarded as a spent force that no longer has to be placated. Sidelining lenders, however, is another story. Companies usually spread fees around to ensure continued support from lending banks.

National Grid had £140mn of fees to play with, and Barclays and JPMorgan would have been satisfied with a fraction of the fees they ended up receiving, especially if they could keep the £7bn of league table credit. So why lavish them with the whole fee pool?

Part of the reason may lie with corporate broking – a unique UK practice. London-listed companies appoint (usually) two banks as corporate brokers to serve as capital markets advisors. Corporate brokers to FTSE 350 companies normally work for free, hoping to score a future M&A or capital markets mandate.

Corporate broking assignments are the closest thing to a “captive” client situation as you’ll ever see in investment banking. Another reason is more practical. National Grid sprung the deal on the market by surprise, and it presumably didn’t want to risk a leak or distract their internal teams working flat-out to prepare for the launch.

This is understandable, but in such cases companies often offer underwriting tickets immediately post-announcement, along with due diligence materials and take-it-or-leave-it documentation.

Even if banks have only a day to give a response, they will get there in time with their underwritings. Looking from the outside, it is surprising that National Grid showered their two corporate brokers with such a bounty.

To be sure, there’s something refreshing about rewarding trusted advisors over the “dumb money” of lending banks. Moreover, Barclays and JPMorgan have probably done a lot of free corporate finance work over the years. Nevertheless, it’s doubtful that the value of this work comes anywhere close to the fees awarded. And it’s difficult to see the upside of alienating lenders you may need in future.

Banks won’t rashly cut credit lines, but there’s no question they will more critically scrutinise future lending requests to determine whether they will earn enough ancillary fee income to justify the commitment.

Read the full article in the Financial Times

Labour should break fiscal rules to fund energy transition, says Greenpeace

Labour should break its fiscal rules to allow borrowing on the scale needed to fund green growth, and resolve its “hypocritical” position on oil and gas licences, the co-head of Greenpeace UK has said.

Shadow chancellor Rachel Reeves has vowed to borrow only to invest and has pledged to match Prime Minister Rishi Sunak’s target to have national debt falling if Labour comes to power.

When asked if Labour should break its rules to spend more on the green transition, Areeba Hamid, the organisation’s joint executive director, said: “Yes . . . because the rules were thought of at a time when the economic situation was very different. “Breaking those fiscal rules, to my mind, is about investing in an economy which is sluggish at the minute. It’s about bringing it back to life,” she told the Financial Times.

Earlier this year, Labour slashed its £28bn annual green spending pledge, which would have been entirely funded by debt, to £4.7bn a year amid concerns about constrained public finances.

This week Sunak called the general election for July 4, as the Tories trails Labour by 21 points in national opinion polls. Hamid argued that loosening its fiscal constraints would enable Labour to invest more in supporting oil and gas workers to reskill and find new jobs.

The party has vowed not to grant new licences for North Sea fossil fuel exploration. The caveat that Labour would honour existing oil and gas licences was “hypocritical”, Hamid said.

“If you’re serious about meeting your climate target, you can’t go ahead with Rosebank,” she noted, referring to the biggest undeveloped oil and gasfield in the North Sea.

Labour declined to provide an official response to Hamid’s criticism’s but one official defended the party’s decision to only stop new North Sea fossil fuel licences, arguing that blocking existing ones would undermine investor confidence in the UK.

“It would be unfair on investors who have made big financial commitments to . . . retrospectively dishonour them,” they said. Under its spending plan, Labour has promised to set up a new publicly owned clean power company, paid for by a windfall tax on the oil and gas sector, and to spend millions of pounds on job creation to underpin a green economy.

The Tories, meanwhile, have attacked Labour from the opposite direction, saying it would be “madness” to leave Britain more reliant on imported fossil fuel, which would generate more CO₂ emissions.

Conservative ministers last year promised to “max out” North Sea reserves. Greenpeace also said it would take a Labour government to court if it pressed ahead with development of Rosebank on the basis that the decision to do so is incompatible with national targets to cut greenhouse gas emissions, building on its existing legal challenge.

Hamid said the organisation’s campaign plans would adapt to a left-wing government, given the “mood music [on climate] is going to change monumentally”. “We’re not in a hurry to scale anyone’s roof,” she said.

Greenpeace activists sparked concern over the security of politicians last summer when they climbed on to Sunak’s North Yorkshire mansion to protest against his support for oil and gas drilling.

Hamid also responded to legal action brought against the organisation by fossil fuel companies whose extraction activities it has criticised. Shell is seeking more than $1mn in damages and legal costs from Greenpeace, after protesters occupied the company’s floating oil platform last year, in a case that started in the English Admiralty Court on Friday.

“The gloves are off. They [Shell] have decided which side of history they’re on and that clarity has been quite useful for our campaigning,” Hamid said. Shell said: “The right to protest is fundamental and Shell respects this absolutely, but it must be done safely and legally.”

Financial Times

Devon water contamination outbreak not resolved for thousands of homes

An outbreak of water contamination in Devon has still not resolved for thousands of homes, which are now receiving bottled water deliveries.

South West Water said it was delivering water to 2,500 affected properties across Brixham following the outbreak of waterborne illnesses across the area earlier this month.

Some 16,000 properties were originally told to boil water before drinking it last week after dozens of reports of people becoming ill.

Two people were taken to hospital in the contaminated water outbreak, Steve Barclay, the Environment Secretary, confirmed.

The majority of households have now had the boil notice lifted, but it remains in force for Hillhead, Kingswear and the upper part of Brixham. The affected areas are near Berry Head, around five miles south of Paignton.

David Harris, the South West Water incident director, said on Sunday: “I know how frustrating this situation will be for the 2,500 properties still affected, especially over the bank holiday weekend.

“I want to reassure people that our teams are working around the clock to rigorously clean, test and install filters so we can restore your drinking water as soon as it is safe to do so.

“While good progress is being made, we will only lift the boil water notice when we and public health officials are fully confident it is safe to do so. This meticulous process does take time, and I am sorry for that, but public safety must be our first and foremost priority.”

A pub in Kingswear, an affected town some five miles south of Torquay, reported a 50 per cent drop in trade compared with a normal May bank holiday weekend.

Hannah Canu, the landlady of the Ship Inn, said it had been a quiet bank holiday weekend as visitors were not risking coming to the area.

She said people were worried about catching the parasite, which causes severe diarrhoea and vomiting.

“I’d say around 50 per cent have not come down for the bank holiday,” she said.

“You see a lot of people walking around but I think they don’t trust coming in, just in case they might catch it.”

South West Water said it is delivering water to 2,500 affected properties across Brixham, following an outbreak of water-borne illnesses earlier this month.

Last week, Mr Barclay said there were at least 46 confirmed cases of cryptosporidium caused by parasite contamination in the Brixham area. Cryptosporidium is a waterborne disease caused by a microscopic parasite.

Anthony Mangnall, the Conservative MP for Totnes and South Devon, previously said South West Water had discovered a damaged air valve that could have allowed animal waste or contaminated ground water to enter the local supply.

Mr Mangnall told LBC News on May 18: “This is such a serious matter that yes, I think heads are going to roll over this. But it’s more important to get the system back up and running, make sure people have confidence in the network, rather than pointing fingers.

“We do the investigation afterwards, and we will make sure that those who are responsible are held to account.”

The Telegraph

Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.