Chevron Oil Spill a Warning for Brazil
As Brazil continues to expand recent offshore discoveries to meet ambitious production goals, Chevron comes under intense scrutiny for a massive oil spill earlier this month. The violations to environmental contamination laws will result in fines for the company and possible prison terms for guilty officials.
Though much smaller than BP's 5 million barrel oil spill in the Gulf of Mexico last year, the spill adds to Chevron's challenge to prosper in the Latin American market. In Ecuador, the company is also engaged in a legal battle over oil contamination in the country's rain forest. Chevron is expected to face further testimony over the offshore spill in the next week and it is expected some of its employees will face prison terms of several years if found guilty for violating environmental laws.
Fábio Scliar, the head of the environment affairs division of the federal police in Brazil, expressed his frustration with Chevron's handling of the spill in an interview Friday. “They’ve been very resistant about providing information, and they were hesitant about allowing me to land on the platform,” said Scliar. “We had to be rather energetic with them about our requests.”
SEE OTHER TOP STORIES IN THE ENERGY DIGITAL CONTENT NETWORK
In response, Chevron spokesman Kurt Glaubitz told the media that Chevron has “accommodated all requests for information in a timely manner,” and that the “situation is largely resolved.”
Many believe the spill is a sign of more challenges and environmental violations to come as the country continues to produce oil from new pre-salt discoveries that lie almost 10,000 feet deep beneath thick layers of salt, sand and rock. Environmentalists are in an uproar, despite Chevron's assertions that the problem has been contained.
The current damage is estimated at about 400 to 650 barrels of oil spilled in the Frade field in waters almost 3,8000 feet deep. An internal investigation with Brazilian authorities is underway.
Ofwat allows retailers to raise prices from April
Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.
The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.
Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.
In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue.
Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”
There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:
- Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps.
- Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold.
- Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice.
Further consultation on the proposed adjustments to REC price caps can be expected by December.
"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.
"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."
United Utilities picks up pipeline award
A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.
The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.
“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.
Camus Energy secures $16m funding
Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent Ventures, Wave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.
As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.