Weekend press round-up: Labour urges Boris Johnson to tackle rising gas bills

In our latest review of sector coverage in the national newspapers, there are calls for the government to get a grip on surging gas prices as energy suppliers set fixed-price contracts well above the price cap. Meanwhile, a science project has found drinking water in schools contains lead that is up to five times higher than the recommended maximum.

Labour urges Boris Johnson to tackle rising gas bills

The opposition Labour party has demanded UK prime minister Boris Johnson take urgent action to counter a dramatic spike in household energy prices in the coming months.

Ed Miliband, shadow business secretary, said the rise in the cost of gas was “deeply concerning” for consumers and businesses.

“While there are global issues involved, the government cannot simply ignore this problem and must act,” he told the Financial Times.

With wholesale gas prices now five times their level two years ago, the cost of household energy is set to rise up the political agenda in autumn. Bills will increase to at least 12 per cent in October for 15 million householders with a further jump predicted in spring.

Miliband said the news highlighted the need for Britain to protect the security of its energy supply by accelerating the provision of domestic zero-carbon power.

“But the last decade of Conservative government has been marked by mixed signals and indecision, whether in selling off the Green Investment Bank or slashing subsidies for onshore wind and solar power,” he said.

“We need more decisive action from government to protect household bills and our climate.”

The Financial Times

Energy firms sell fixed deals far above price cap

Households are being sold fixed-price gas and electricity contracts that are hundreds of pounds a year more expensive than the government’s default price cap amid fears the cost of energy will continue to rise.

Scottish Power and Shell Energy, two big energy suppliers, are both marketing tariffs that encourage customers to voluntarily lock in their energy prices at more than £1,530 a year for a typical household for at least the next year. By comparison, customers on default variable tariffs, which are covered by the price cap that is updated twice a year and have typically been the most expensive option, will have their bills rise to £1,277 a year for a typical household from October, from £1,138 at present.

The companies say that the expensive fixed-price deals reflect surging wholesale gas and electricity costs, which are trading at record highs, and offer “price certainty” compared with remaining on the variable tariffs.

Centrica, owner of British Gas, warned that a cold winter could mean a “supply crunch”, telling the Financial Times that prices could be so high that “some gas-dependent businesses in the UK and Europe may simply decide not to produce”.

Scottish Power is marketing fixed prices until December 2022 at £1,577 a year and has barred new customers from signing up to the cheaper standard variable tariff, covered by the price cap. A spokesman said the fixed tariff gave customers “certainty of their prices until at least the end of December 2022, so they will not need to pay a higher price for their energy if wholesale costs continue to increase over this period”.

Shell is advertising a fixed-price deal at £1,537 until October 2022, although new customers can still sign up for the cheaper standard tariff. It has a deal fixed until August 2024 at £1,436 a year. A spokesman said the fixed prices reflected wholesale prices that were 20 per cent higher than a month ago, when the price cap was set.

The Times

Energy losses leave their mark on Czech Sphinx Daniel Kretinsky

The businessman nicknamed the “Czech Sphinx” may be sitting on large paper profits from his stakes in J Sainsbury and Royal Mail, but Daniel Kretinsky’s British energy business has been less successful with a series of investment hedges.

The billionaire’s EP UK Investments has fallen deeper into the red and tapped a £123 million loan from its European parent company.

EP UK Investments, whose ultimate parent company is based in Luxembourg and controlled by Kretinsky, recorded a loss of £23.1 million for 2020, down from £3.3 million in 2019, after steep losses on investment hedges.

The company holds investments in power generation assets, including Langage and South Humber Bank, two combined cycle gas turbine power plants near Plymouth and in Lincolnshire respectively, as well as Lynemouth Power, a biomass plant in the northeast, and Kilroot, a coal and oil-fired plant in Northern Ireland.

EP UK Investments is also the nominated commodity trading business for its assets in Britain, through power, gas and carbon contracts.

The deepening losses last year were mainly due to a “mark to market loss of £19.2 million on open power, gas and European Usage Allowances hedges”, the accounts state.

The Times

Energy rationing feared as Russia’s gas squeeze exposes the UK’s perilously low reserves

Russia’s Vladimir Putin is orchestrating a deliberate energy supply crisis in Europe by restricting the seasonal flows of pipeline gas, preventing the region rebuilding its severely depleted inventories fast enough before the onset of winter.

The UK is not the target of this geostrategic squeeze but is dangerously exposed after having slashed its gas storage capacity to wafer-thin levels in order to save costs. The country must rely on energy back-up through gas and electricity interconnectors to the Continent, which cannot be taken for granted in emergency circumstances.

“The UK is more vulnerable to a gas supply crisis than other Western European countries. It has way too little storage and it is buying more Russian gas than it realises through the Netherlands,” said Marco Alverà, chief executive of the Italian pipeline and infrastructure group SNAM.

Gas prices have exploded as a confluence of global factors throw Europe’s energy system into chaos. British futures contracts for November hit an all-time high of 135 pence per therm last week, three times typical levels for the season.

Electricity prices blew through €100 (£85.71) per megawatt/hour across most of the Continent in August, routinely breaching €120 in Spain and the UK

Energy experts warn that British consumers could face de facto rationing, or a price shock big enough to cause serious distress and force changes in behaviour. “I can’t ever remember a situation like this over the last twenty years. We’re looking at potential shutdowns and demand destruction,” said Adam Lewis from energy consultants Hartree Solutions.

Read the full article (subscription required) here

Daily Telegraph

Gone with the wind: why UK firms could miss out on the offshore boom

At the foot of the disused Fawley power station on the Hampshire coast, giant wind turbine blades lie on the sand like the fins of some strange beached sea mammal. The site of what was once one of the UK’s most polluting power plants is now a waiting area for turbine blades, before they join the growing number of windfarms off the British coast.

More than 1,000 of these precision-designed aerodynamic structures, each about 80 metres long, have been shipped across the water from a factory on the Isle of Wight. Owned by Danish energy giant MHI Vestas, it employs almost 700 people on the island and usually produces seven blades a week.

The UK has already installed almost 10 gigawatts of wind power capacity offshore, enough to power the equivalent of about 7 million homes. Boris Johnson set out plans last year to quadruple that capacity, and build enough giant turbines to power every home in the UK cleanly by 2030.

Vestas began producing components for turbines on the Isle of Wight 20 years ago, and is now planning to open a new facility in the north-east of England, where it may employ up to 2,000 skilled workers. It is a beacon for the way this renewable energy source can power a green economic revolution across the regions. But as ambitions ramp up, concerns have grown that foreign companies will be first in line to benefit, while homegrown businesses miss out.

The 2030 target is bold. It requires almost £50bn in investment and for the equivalent of one turbine to be installed every weekday for the whole of the next decade. Underpinning the ambition is a landmark “sector deal” struck between government and the wind power industry in 2019, which sets out a raft of far-reaching targets and commitments from both private and public sectors.

A crucial industry commitment, made in exchange for government subsidy, is the pledge to use UK-made components for at least 60% of every windfarm. While this would be an improvement on the existing trend, which has seen fewer than half of offshore windfarms built using UK parts, some say more needs to be done to build a homegrown supply chain and avoid being left behind in the global renewables race.

The number of people working in direct and indirect jobs connected to the sector is poised to rise, from 26,000 today to more than 69,800 by 2026, according to the Offshore Wind Industry Council (Owic). Most of these jobs will be in the north-east of England, Yorkshire and the Humber, East Anglia and Scotland – areas that once made up the UK’s industrial heartlands. But many of the workers can expect to be employed by foreign companies.

The GMB trade union has warned that the UK risks squandering a major economic benefit by allowing many of the components of its offshore wind boom to be manufactured in the factories and steel mills of Asia.

Read the full article here

The Guardian

Science project reveals high lead levels in schools’ water

It was meant to be a straightforward school project to spark children’s curiosity about water.

But pupils at 14 schools taking part in the Great British Water Project have made a far more startling discovery – that their drinking water contains lead that is up to five times higher than the recommended maximum.

“We really didn’t expect there to be any safety issues at all so this has really taken us by surprise,” said Andrew Fox, chairman of trustees for the Don Hanson Charitable Foundation, which ran the project.

The charity distributes “Hanson boxes” containing educational materials on a different topic each year to 20,000 schools. The water project was a last-minute addition to this year’s boxes, Fox said. More than 600 schools received materials for children to test things such as the acidity of rainwater, survey local ponds and the taste of their drinking water.

“We were doing blind tasting and looking at rainwater and there was a pond survey and then we started getting these weird results,” Fox said.

Several schools reported levels of lead at 50 micrograms per litre – five times the maximum allowed. Even low levels of lead are toxic and can reduce children’s IQ and damage their nervous system.

Lead piping and lead solder have been banned from water systems for decades in the UK, and the Drinking Water Inspectorate’s latest report says last year only 40 instances of lead contamination above the maximum were discovered.

The charity conducted its own tests on samples returned by 81 schools and has confirmed that 14 samples have lead above 50 micrograms per litre, with several more showing signs of elevated levels

The charity is now contacting the schools to alert them and filtration firm Aquaphor, which co-sponsored the project, said it would supply free water filters to affected schools.

Around 8 million properties in the UK, mostly homes built before 1970, are estimated to have some form of lead in the drinking water system. Water companies add small amounts of orthophosphate to water to reduce the risk of lead from pipes dissolving into the water, which can keep lead levels below the current maximum of 10 micrograms per litre.

A spokesperson for the Department of Environment Food and Rural Affairs said: “The UK has very high quality drinking water. While the use of lead pipes has long been banned, many older properties may have lead pipework which will inevitably lead to contamination.

“If a school becomes aware they have lead pipework or have a test which has failed for lead, they should contact their local water company who will be required to enforce the removal of the lead pipe by the owner of the building.”

In some parts of the UK, water companies have removed lead piping from schools. In 2019, Thames Water replaced pipework in about 450 primary schools in London built before lead piping was banned.

But some headteachers are concerned that the cost of replacement will fall on their budgets.

The Observer

Glasgow company fined £150,000 for making nuisance calls

A Glasgow company has been fined £150,000 for making more than half a million nuisance marketing calls.

The Information Commissioner’s Office (ICO) found that DialADeal Scotland Ltd (DDSL) had made the unsolicited calls between August 2019 and March 2020.

They were about non-existent Green Deal energy saving schemes, including boiler and window replacement, loft insulation and home improvement grants.

There were more than 500 complaints – one of the highest numbers received.

The calls were made to telephone numbers which had been registered with the Telephone Preference Service (TPS) where people had not given their permission to receive them. This is against the law.

The complaints suggested that DDSL had used several false trading names and the ICO’s investigation found that the company also disguised the telephone numbers they were calling from. This is also illegal.

Ken Macdonald, head of ICO regions, said: “DialADeal were breaking the law on a number of fronts, not only were they making calls to people without their permission, they were also hiding their identity using false names and spoof numbers.

“Calls about Green Deal schemes can be a real problem as people often believe they are legitimate but, thanks to the complaints made by the public, we’ve been able to take action.

“Companies making similar nuisance calls should take note, we use our powers where we see serious breaches of the law.”

As well as issuing the fine, the ICO has also given the company an enforcement notice ordering it to stop making unsolicited marketing calls and has successfully blocked its attempt to be struck off the Companies House register to try and avoid paying any fine.

BBC News

Electric upstarts on a rocky road

When he was a student in the Automotive Laboratory at the Massachusetts Institute of Technology, RJ Scaringe had a harebrained idea. He wanted to start a car company, he told his professors. In an industry where it costs billions of dollars to even attempt to compete, it seemed a fanciful notion. In the past half-century, only two new car companies have reached mass production: Hyundai, in 1967, and Tesla. Scaringe might as well have said he wanted to colonise the moon.

Yet the 38-year-old has made good on that lofty ambition. His 12-year-old electric vehicle upstart, Rivian, has produced countless prototypes — including, in its early days, an ultra-efficient petrol-powered sports car. He has cajoled local governments into vast tax breaks, revived a defunct factory in rust-belt America, and coaxed $10.7 billion (£7.8 billion) from Jeff Bezos, a Saudi billionaire and countless other investors.

Now the maker of electric delivery vans and luxury pick-up trucks is about to float on the public market at a rumoured $80 billion valuation.

The mooted offer price would value Rivian at 40 per cent more than Ford, another investor that Scaringe convinced to plough $500 million into the company. Ford sold four million vehicles last year. Rivian — based in nearby Plymouth, Michigan — has zero cars on the road aside from a handful of vans being tested by Amazon, its biggest customer.

Yet Scaringe is poised to cash in on a mania that has taken hold of Wall Street. Since June 2020, 11 electric car start-ups have floated including Lucid Motors, Nikola, Faraday Future, Canoo, Lordstown Motors and Fisker. Another dozen battery and parts suppliers have also made their debut. Together they have raised more than $17 billion, according to data compiled by BloombergNEF.

And while these upstarts can typically boast of robust “pre-orders” for their eye-catching vehicles, most have yet to deliver a single car to a customer. Instead, the would-be carmakers have racked up a collective track record of production delays, defenestrated executives and shareholder lawsuits.

This is perhaps not surprising. All of the above — except for Rivian, which is planning a traditional listing — have floated via special-purpose acquisition companies (Spacs). These permit businesses to go on to the markets by merging with a cash shell and skipping the more stringent requirements of traditional listings. Spacs allow companies, for example, to include projections of sales and growth — a practice prohibited in typical floats. In short, they can paint a rosy picture that is liable to fall short of reality.

“There is going to be a tremendous shake-out within this start-up community,” said Sam Jaffe of Cairn Energy Research Advisors. “Most will fail.”

Read the full article (subscription required) here 

Sunday Times

Prime minister hosts summit to thrash out green pensions plan

Boris Johnson will meet pension and insurance bosses in Downing Street next month to thrash out plans to channel billions of pounds of retirement funds into ‘green’ projects.

A source said there will be in-depth discussions about how pension cash can be diverted into initiatives such as installing solar panels in homes and providing charging points for electric cars.

More than £1trillion is sitting in defined contribution pensions – including workplace schemes.

The Government is hoping to unlock more of this to invest in Britain’s green economy and ‘build back better’ initiative. Another £2trillion is in annuities and defined benefit schemes.

The agenda is expected to include more detail on funnelling pension money into various projects to reach ‘net zero carbon’ by 2050 – the commitment to reduce greenhouse gases to offset carbon emissions in order to combat climate change.

Sources said the trade body the Association of British Insurers is separately meeting with City Minister John Glen this week to talk over the new push.

One of the plans is to make homes – one of the largest emitters of greenhouse gas after travel – more reliant on green energy such as solar power. That project is estimated to cost about £250billion.

A source said: ‘This needs a scheme, and the Government is probably best placed to do it because you need a supply chain lined up including investment and the people to implement projects. There is a need to coordinate and get the right types of projects going.’

Daily Mail

No 10 wargaming to stop Nicola Sturgeon using Cop26 as ‘advert’ for Scottish independence

No 10 has been plotting how to cut Nicola Sturgeon out of Cop26 to prevent the first minister stealing the limelight, The Independent can reveal.

Advisers at No 10 and the Cabinet Office have been trying to work out how to prevent this autumn’s landmark Glasgow summit from becoming an “advert” for Scottish independence.

The strategising was provoked by fears that Ms Sturgeon might attempt to hijack the summit for her own political ends, according to meeting notes and WhatsApp messages seen by The Independent.

According to the notes, it was suggested that public statements tied to the summit should focus on Glasgow as a city in the UK, and that mentions of Scotland should refer to its place within the United Kingdom wherever possible.

It was also suggested in messages that the prime minister, Boris Johnson, should avoid sharing a platform with Ms Sturgeon in the run-up to and during the event, and that he should “neutralise” her by including other devolved leaders where possible.

“This can be labelled as a role for her [as one of the UK’s leaders] but avoids her taking centre stage”, one message read.

“We can’t let this be used as an advert for an independence campaign,” another said.

Without a counter-strategy, said the meeting notes, there was a risk that the Scottish leader could “hijack” the summit by using it as a “soapbox for her independence obsession”. The notes also record efforts to ensure that the union flag is displayed as much as possible.

Sources familiar with the meetings and correspondence also said a deliberate decision had been made that the prime minister would not meet with the first minister on a recent trip to Scotland, as part of the wider effort to frame Cop26 and green investment as a “UK win”.

The Independent

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.