May 17, 2020

Texas Power Outage Raises Oil Price

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city
Gas
high
Admin
2 min
A Power outage in Texas City, Texas (USA) shuts down three oil refineries, causing oil prices to rise to a 33-month high
A power outage that swept across Texas City, Texas (USA) has slowed operations in three major U.S. oil refineries. The result of the disruption in pro...

 

A power outage that swept across Texas City, Texas (USA) has slowed operations in three major U.S. oil refineries. The result of the disruption in production at the three refineries—which process more than 800,000 barrels of oil per day—has caused oil futures to gain 1.5 percent. This is the highest spike on record since July 2008.

“The power outage in Texas City affects over 4 percent of the refining capacity in the nation,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “We will lose gasoline production over the next couple of days as inventories have already been steadily falling since the middle of February.”

BP, Marathon Oil and Valero Energy Corp. refineries were shut down amidst the power outage. However, sources report that Valero has already restarted production at its refinery.

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How does this translate at the pump? Well, gasoline prices rose 0.6 cents during the power outage. This may not seem like much, but as prices have steadily been rising, it is becoming clearer just how fragile the complicated oil network actually is.
A lot of fingers have been placing blame on speculators lately for higher oil prices, but infrastructure plays just as crucial a role, especially refineries. Let us not forget that several of Japan’s refineries were destroyed in the earthquake and tsunami, which had a dramatic effect on oil prices.

The oil game is a lot like taking an economics class in Las Vegas. You have your supply and demand—and the distribution networks that support them both—and then you have speculators gambling the odds of the market. If any part of that system comes into conflict, then the entirety is affected. A handful of refineries halting production for a few days is just one example.

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Jul 26, 2021

Ofwat allows retailers to raise prices from April

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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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