New rule to end gas supply crises in Europe
The European Commission is set to welcome a new rule on gas supply regulation which hopes to prevent gas supply crises in Europe.
Negotiators of the Council and the European Parliament reached the agreement last week. The rules ensure a regionally-coordinated and common approach to the security of supply measures among EU Member States. As such the European Union will be in an improved position to prepare for and manage gas shortages if a crisis occurs.
Gas covers around a quarter of the EU's energy demand. The EU's current annual gas demand of around 400 billion cubic metres is projected to remain relatively stable in the coming years. Around 65 percent of the EU's gas is imported – its main suppliers are Russia, Norway and Algeria.
After the gas crises of 2006 and 2009, the EU reinforced its security of gas supply, most notably by adopting the first security of gas supply regulation in 2010. This existing regulation already required Member States to prepare and share with each other plans with national measures for crisis prevention and mitigation, obliged companies to ensure gas supply to protected customers even in the event of supply disruption, and provided for the installation of bi-directional capacity.
Now, a solidarity principle will apply for the first time, meaning that Member States will have to help their neighbours if a serious crisis occurs. Regional groups facilitate the joint assessment of common security of supply risks and the development of an agreement on joint preventative and emergency measures, and greater transparency will also be prioritised.
European Commission Vice-President for the Energy Union, Maroš Šefčovič, said: "We have made important progress in improving energy security, one of the Energy Union's main objectives. The new rules are built upon solidarity and cooperation among the Member States. While the national conditions and specificities of the Member States are an important building block, the EU-wide framework of regional groups makes coordinated actions possible. Thus, Europe becomes better equipped to avoid and cope with eventual crises."
Commissioner for Climate Action and Energy, Miguel Arias Cañete, said: "With this agreement between the Parliament and the Council, we take another big step forward towards strengthening the EU's energy security. The new regulation paves the way for better coordinated crisis prevention and handling of potential gas crises by combining standards set at EU level with regional cooperation and solidarity. This increases our effectiveness and reduces costs for EU consumers."
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.