May 17, 2020

Oil and gas industry optimistic in New Zealand

Admin
2 min
Marsden Point Oil Refinery in New Zealand
Although New Zealands specific upstream fiscal and regulatory terms are unlikely to change in the near future, the sectors exposure to wider economic p...

Although New Zealand’s specific upstream fiscal and regulatory terms are unlikely to change in the near future, the sector’s exposure to wider economic policy is a risk, says research and consulting firm GlobalData.

According to the company’s latest report (New Zealand Upstream Fiscal and Regulatory Report), the current fiscal terms of New Zealand’s upstream oil and gas industry will remain attractive, with a government take of around 45 percent. However, the country’s upcoming general election in 2014 could pose risks relating to the upstream sector’s exposure to more general policies, with possible increases in the tax burden.

At present, the only petroleum producing area in New Zealand is the Taranaki Basin, but New Zealand Petroleum and Minerals is hoping to increase interest in exploration through its new system of Block Offers, which could bring positive results to the upstream sector. However, potential tax increases could harm these plans.

The greatest potential change in fiscal terms may lie with the corporate income tax (CIT) rate. Upstream oil and gas companies operating in New Zealand pay the general CIT, rather than a specific petroleum tax, so tax rates are more likely to be affected by broader economic trends.

Furthermore, while the government is currently embarking on a deficit reduction plan that focuses on lowering government spending, this focus may change depending on the upcoming election result.

“Polling currently indicated that combined, the Labour and Green parties possess a slight lead over the center-right National party, which is currently in power,” says Jonathan Lacouture, GlobalData’s lead upstream analyst for the APAC region. “If a center-left government forms following the next election, deficit-reduction plans would likely be rebalanced to give greater weight to tax increases.

“Based on recent Labour policies, the top rate of personal income and the capital gains tax are likely to represent the most immediate targets for these increases in taxes. However, moves by a new government may possibly be made to retract the decreased CIT implemented by the National party.”

The CIT rate has decreased from 30 percent in 2008 to a current rate of 28 percent. Lacouture says that the Green party may potentially influence policy by pressuring the government into introducing a carbon tax in lieu of the credits-system currently in place.

Source: www.globaldata.com

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Jul 26, 2021

Ofwat allows retailers to raise prices from April

Ofwat
Utilities
water
prices
Dominic Ellis
3 min
Ofwat confirms levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue

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:   

  1. 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. 
  2. 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. 
  3. 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.

Anita Dougall, CEO and Founding Partner at Sagacity, said Ofwat’s decision comes hot on the heels of Ofgem’s price cap rise in April.

"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 VenturesWave 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.

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