Another week, another new Audi. Two new Audis, in fact. The German car maker has announced a couple more additions to its Q line up of SUVs. The Q4 is a coupe-SUV hybrid that will go up against the BMW X4 and Mercedes GLC Coupe. As its name suggests, it’ll be positioned between the compact Q3 and bigger Q5. At the other end of the scale is the Q8, which will go head to head against the Range Rover. It’s lower and sleeker than the Q7 Audi is also producing. In concept form, it sat only four people, although it seems likely the production version will be a five seater. There’s a 630 litre boot as well. Eagle eyed Audi followers will notice the only SUV slots left to fill are the Q1 and Q6. Watch this space…
Energy regulator Ofgem has approved partial compensation for National Grid over two emergency power black out contracts. The network is to receive back all of the £54 million cost of its contract with SSE to provide so-called Black Start services from its Ferrybridge Power Station in Yorkshire. The decision came after Ofgem agreed National Grid could not have foreseen the Perth-based utility’s announcement in February that it was consulting over a proposal to bring an end to commercial operations at three of the plant’s four units. The Grid will also recoup a further £41.3m relating to its contract with Drax, after it also brought forward plans to mothball certain assets. However, National Grid said it was disappointed in that decision as it was seeking total compensation of £59m in the case. Ofgem ruled the network operator will have to sustain a £17.7m hit after concluding the Drax issue did not qualify as an “income adjusting event” – defined as an unforeseen situation beyond National Grid’s control. Under Ofgem’s cost targets, National Grid is liable to pay 30% of every pound overspent. “The result of Ofgem’s decision is that National Grid will recover £95 million of the additional costs, and the group’s exposure is limited to a maximum of £18m,” the operator told investors. “This reflects full recovery of the Fiddler’s Ferry contract and recovery of 70% of the Drax contract, after applying the sharing mechanism. “National Grid is disappointed with Ofgem’s decision regarding the Drax contract as it believes the costs could not have been reasonably foreseen.” “In 2015/16 the Balancing Services Incentive Scheme contributed £27m in profit before tax, and the £18m impact will be set against any BSIS out performance in the current year.” SSE said it was not involved in the current process. “SSE’s tender reflected the costs associated with Fiddler’s Ferry providing the Black Start services required by National Grid,” a spokesperson said. “Matters relating to the competitive tender process and cost recovery are for National Grid and Ofgem.”
Perth-based SSE has been called on to cut its domestic electricity bills until 2023 by energy regulator Ofgem in price control negotiations. The annual average household bill in the North of Scotland area, where electricity is produced by hydro power, should be reduced by £27. The regulator has also proposed the average household bill should be reduced by £18 a year in the South of England area. The figures come from price control framework negotiations to cover the eight years from April 1 2015. The RIIO (Revenue=Incentives+ Innovation+Outputs) process is intended to balance the interests of customers with electricity generating companies who need to raise money to maintain the network. SSEPD, the generator’s power and distribution division, had submitted a business plan proposing significant reductions in the distribution share of electricity bills and improvements in the standard of service for customers. Ofgem’s final determination delivered yesterday proposed a real reduction in the distribution share of the average household bill in SSE’s North of Scotland and South of England network areas by the sums specified. SSEPD said it is committed to delivering the improvements in customer service that it set out in its business plan. A statement from the company continued: “Over the coming weeks SSEPD will carefully examine the detail of Ofgem’s final determination and assess whether it represents a fair balance for customers and investors. “SSEPD has until early next year to complete its assessment of Ofgem’s final determination.” Ofgem has set out plans for five out of the six companies that run Britain’s local electricity network, who will spend around £24 billion to renew, maintain the electricity network and connect small-scale renewable generation. Ofgem also ordered two power generation firms to pay penalties totalling £39 million for their failure to deliver energy saving measures to low-income households. The regulator secured a record £28m payment from North Yorkshire-based Drax Power for not meeting targets under the Government’s Community Energy Saving Programme. Drax Power delivered just 37.1% of its carbon emissions reduction target, leading to several thousand households in some of the most deprived areas in Britain missing out on energy saving measures which would have helped lower bills. Ofgem also handed a penalty of £11m to generator InterGen after it delivered 61.2% of its required energy saving measures to around 2,200 households by the end of May last year. Ofgem is considering how the penalties can be used to benefit the consumers for whom the scheme was intended.
Perth-based energy firm SSE is being investigated by Ofgem over concerns that it restricted competition in the electricity connections market. The regulator has launched a probe over the way housing developments and other sites choose their power provider. Ofgem said it wanted to increase competition in this market but had found evidence that SSE possibly breached competition law. It is to investigate whether the company put its rivals at a disadvantage. It came as the regulator published a separate announcement on new rules for price comparison websites to meet tighter standards on how tariffs are displayed. The “confidence code” is designed to ensure customers can trust that some deals are not hidden from their view. Ofgem said sites would have to list prominently the companies with which they had commission arrangements, and to make it clear they earn commission on certain tariffs. Price comparison sites must meet the new rules by the end of March or face losing their accreditation with the regulator. The Ofgem announcements come after three of the Big Six household suppliers E.ON, British Gas and Scottish Power said they were cutting tariffs after falls in wholesale energy prices. Ofgem has been reviewing the electricity connections market over the last six months to identify its competitiveness. There has been progress in the last five years, but the regulator has set out steps firms must take in the next six months to improve competitiveness. A new code of practice will give independent competitors more say in the process, with the aim of levelling the playing field with network operators. Maxine Frerk, Ofgem’s senior partner for distribution, said: “We are requiring electricity network companies to work quickly to resolve the issues identified in the connections market, to reduce the hassle of getting connected to the grid and help lower costs for customers. “We are determined to ensure this part of the energy market works in customers’ interest, and will use the full range of our powers to do so.” Ofgem added that the it had launched an investigation into a possible breach of competition law by SSE did not imply it had reached a conclusion that this was the case. SSE said: “SSE acknowledges Ofgem’s announcement of an investigation into its distribution business’s provision of electricity connections services in central southern England. “SSE will cooperate fully with the investigating authorities and will not make any further comment until the investigation is completed.” The announcement on price comparison websites comes after Ofgem launched a consultation on the code governing the sector in August, with the newly revised rules announced yesterday. It will be published by January 30. Energy Secretary Ed Davey said: “We’ve made switching faster, and these changes will make it even easier to find the best deal out there. “But it’s vital that consumers have confidence that they really are being offered the best deal, so I expect to see the Confidence Code implemented across the board.”
Energy watchdog Ofgem conceded some financial ground to SSE over the costs of developing a vital electricity link to the Highlands. The regulator yesterday said it had decided to increase approved expenditure on the Caithness to Moray transmission project by £56 million to £1.11 billion. However, the increase still means SSE subsidiary and project developer Scottish Hydro Electric Transmission Limited (Shetl) faces a £105m shortfall compared with its own estimate of the cost of installing and commissioning the 160km-long high voltage direct current (HVDC) subsea cable. The link, which will connect onshore power conversion stations at Blackhillock near Keith and Spittal in central Caithness, is designed to transform the ageing electricity network in the Highlands and provide additional capacity to allow for the connection of future renewable energy projects to the grid. Its construction will add £1 to the network component of an average domestic electricity bill. A published letter stated, electricity transmission partner Kersti Berge said Ofgem’s decision to increase the expenditure allowance had followed a number of challenges by Shetl since it first announced its cost estimate for the project in October and put out the issue for consultation. That document outlined Ofgem’s concerns that proposed staffing costs for the project and Shetl’s estimate of the risks associated with the development were “excessive” based on the evidence presented. “SHE Transmission responded with challenges to our project assessment,” Ms Berge said. “These cover some aspects of the onshore and HVDC costs, the project risks and overall resourcing. “SHE Transmission also reduced its overall cost estimate by £13m to £1,223m. “The lower estimate is the result of a revaluation of some contract costs (based on a favourable currency movement), and a reduction in its estimated value of project risks. “Additional contract negotiations and an increase in operations and regulatory consents costs partly offset these reductions. “We’ve considered SHE Transmission’s arguments and new information and we’ve revised our view in some areas. “As a result we have decided the efficient cost for the project is £1,118m. “This is £56m more than the project costs we consulted on in October.” The changes represent an overall 5% upwards revision of Ofgem’s initial cost proposal, with 2% improvements offered in budgets for both the onshore and seabed cable works. The largest difference relates to the risk profile of the project where Ofgem is now proposing a 34% cut in budget compared to a previously envisaged 62% fall. Shetl yesterday said it “noted” Ofgem’s cost decision and a secondary move to change regulatory funding of uncertain costs that would allow it to increase it allowances for the link during construction. The firm said it would now assess whether the Ofgem funding package represented an adequate return for the business. “The Caithness Moray transmission project is intended to release the potential for up to 1.2GW of new renewable generation in the far north of Scotland,” the developer said in a statement. “SHE Transmission will now closely study the decision to assess whether the allowed costs and mechanism for recovering other future costs are, when taken together, adequate remuneration for the risks associated with the project.” Energy Minister Fergus Ewing said the project was of huge significance to the economy and the Scottish Government’s clean energy ambitions. He said: “The project will enable 1.2 GW of new renewable generation to connect to the high-voltage network providing enough electricity to power the equivalent of over 500,000 homes and also making a substantial contribution toward our renewable electricity target.” “We trust that the terms announced by Ofgem today will help enable theproject to proceed on time and we will be staying in close contact with the relevant parties as the project moves forward to construction.” He also welcomed a decision by the regulator last month to approve Scottish Power Transmission’s amended revenue allowance of £110.6m for the souther portion of the controversial Beauly to Denny overhead electricity line.
SCOTTISHPOWER has been banned from proactive sales for 12 days after failing to meet customer service targets. The Glasgow-headquartered firm signed up to new Ofgem targets in November after the regulator identified problems with customers experiencing long call waiting times and late bills. The company managed to address those concerns within the three-month time limit set by Ofgem, but failed to resolve a third issue relating to the implementation of decisions by the industry ombudsman. Sarah Harrison, Ofgem’s senior partner for enforcement, said: “A sales ban illustrates the difficulties ScottishPower is having delivering the levels of service customers deserve. “While Ofgem’s targets have driven significant improvements on Scottish Power’s performance, we remain very concerned about how customers are being treated.” The firm has now been ordered to remove its backlog for acting on ombudsman decisions for individual complaints by the end of November. Ofgem said it had been told the target was met in December and this was confirmed by the ombudsman. But in January the regulator said it “uncovered new evidence that showed the company had not fully met its November target”. As a result, the firm has accepted a 12-day ban on proactive sales. More than 500 sales advisers will now spend the period through to March 15 “providing support” to ScottishPower’s customer service teams across the UK. The lapses came as the business struggled to integrate a new £200 million IT system. Where the company has been unable to resolve an ombudsman decision fully, it has been providing a free service and writing-off past debt. Ofgem said: “ScottishPower will continue to honour this commitment until the underlying root cause affecting the account is fixed.” As well as its ongoing investigation the regulator is also now demanding the firm undertake an independent audit of its progress on improving customer service. It said it would keep the need for any further action under review. “Scottish Power is committed to delivering the best service possible and treating our customers fairly,” retail and generation chief executive Neil Clitheroe said. “We have a long track record of delivering high standards of service to our customers. “The process of moving to our new system has been challenging and has resulted in service problems for some of our customers. “We are determined to put this right. “We continue to correct problems, pay appropriate compensation and ensure no customer is left financially disadvantaged.”
Utility company SSE has offered a series of legally binding commitments to address competition concerns over the way it handles electricity connections for new developments. The entire UK market for new connections is worth more than £500 million annually. During a review of the sector by industry regulator Ofgem in 2014, concerns were raised that SSE may have been involved in anti-competitive behaviour when providing non-contestable electricity connection services through its Southern Electric’s Power Distribution (SEPD) network. The watchdog formally opened an investigation into SSE’s practices in January last year. In September, the Perth-based utility wrote to Ofgem and offered to provide commitments to alter its conduct to alleviate the competition concerns. Ofgem continued its investigations in relation to SSE and certain independent distribution network operators (IDNO) and independent connection providers (ICP). Among the practices identified as giving concern were that SEPD applied additional or higher non-contestable costs to independent operators than it charged to its own connections business for equivalent works. SSE stressed that Ofgem had not made a finding questioning the legality of its processes. However, a spokesperson said the company had agreed to ensure quotations for non-contestable services were now provided on a “broadly equivalent basis” and offered to physically separate its non-contestable and contestable connection teams. “SSE has also offered to revise its external and internal policies and procedures as they apply to connection services and to put in place a number of reporting measures which will enhance transparency and allow Ofgem to monitor implementation of and compliance with these commitments,” the spokesperson said. “These commitments show SSE’s continued support for Ofgem’s work in promoting a more competitive electricity connections market.” Ofgem has now opened a public consultation on SSE’s commitments. It will run until August 3.
Britain’s big six energy companies will face fines unless they open up the electricity market to competition from smaller independent rivals, under proposals by the regulator. Ofgem outlined a series of measures designed to “break the stranglehold” of the firms which include Perth-based SSE and Glasgow’s Scottish Power in a bid to push down prices for hard-pressed households. Energy Secretary Ed Davey said the Government is ready to bring in new laws should the new measures be “delayed or frustrated”. The regulator says it wants to create a more level playing field for independent rivals to buy and sell power. Smaller suppliers include the likes of Co-operative Energy, Ecotricity, Ebico and First Utility. Under its plan the big six British Gas, EDF, E.ON, NPower, Scottish Power and SSE cannot refuse reasonable requests from small suppliers to buy electricity. They have also been told they must sell power to the smaller companies at a fair price and negotiate fairly at all times. The big companies will be given deadlines for acknowledging and responding to requests. Ofgem said the rules would also apply to the largest independent power generators, Drax Power and GDF Suez. In addition, the big six companies will have to post prices at which they will buy and sell power for up to two years in advance. The regulator said that while the major companies were selling at least 30% of their output in the market for short-term energy use, there was still not enough trading of power for use in the “forward market” dealing with energy use further ahead. An obligation to post prices at which they buy power two years in advance would “make it far easier for independent suppliers to buy power for their customers”, Ofgem said. The proposals come ahead of a statutory consultation this autumn, with the changes expected to come into effect next year. Andrew Wright, senior partner for markets at Ofgem, said: “Our aim is to improve consumer confidence and choice by putting strong pressure on prices through increased competition in the energy market. “Ofgem’s proposals will break the stranglehold of the big six in the retail market and create a more level playing field for independent suppliers, who will get a fair deal when they want to buy and sell power up to two years ahead.” The regulator also says the rules on price transparency will help power generator owners decide when to invest in new power stations or carry out maintenance on existing ones. Mr Davey said: “An increased role and level playing field for independent suppliers and generators is precisely what will help drive the competition that delivers better value for consumers and businesses. “Independent suppliers will have greater access to the power generated by the big six and other large power producers, enabling them to purchase and deliver cheaper energy to consumers. “Ofgem’s proposals to increase transparency in the way electricity is traded will give independent generators a foothold in the UK energy market and encourage new players to invest. “I encourage companies to work with Ofgem to implement these proposals as swiftly as possible. Government stands ready to use the Energy Bill to take necessary measures to improve energy market liquidity should Ofgem’s proposals be delayed or frustrated.”
A bid by SSE and EDF to change energy industry rules and force a £120 million payout to power generating companies has been dismissed by the UK’s competition watchdog. The Perth-based utility and its French-headquartered counterpart originally lodged a claim with energy market regulator Ofgem two years ago that stated their network charges in 2015/16 had exceeded the €2.50 per MW/h cap on transmission charges paid by generators under EU regulations. The pair argued for a modification to the rules to address the situation. If allowed, SSE and EDF’s claim would have led to an estimated £120m payout from National Grid to power generating companies that had fallen foul of the breach. However, Ofgem dismissed the claim in a decision made late last year. The pair immediately appealed the case to the Competitions and Markets Authority (CMA), but that has now also gone against them. “The main point of dispute was whether there was an exclusion from the EU cap on transmission charges for the cost of connections between offshore windfarms and the onshore grid,” the CMA said in a statement. “The CMA concluded that – applying the correct approach to EU law – there was such an exclusion and therefore there had not been a breach of the cap and Ofgem was entitled to reject the modification request.” SSE said it was “disappointed” at the outcome and said it and EDF would now spend time reviewing the decision. “SSE is disappointed by the decision of the CMA to refuse the appeal lodged against Ofgem’s decision not to grant the CMP261 modification,” a spokesperson for the Perth utility said. “SSE, together with EDF Energy, will now review the CMA’s decision in detail.” Andrew Wright, senior partner at Ofgem, said the CMA had made the right decision. “It is good news for consumers that the CMA has upheld Ofgem’s decision,” he added. “If the modification had gone ahead, it is likely that the rebate would have cost consumers up to £120m and led to further payments to larger generators in the longer term. “It is disappointing that SSE and EDF challenged our decision. “The energy market is under close scrutiny and companies should be working hard to deliver a better deal for customers rather than seeking additional revenues that will add to customers’ bills.” firstname.lastname@example.org
A seven-month regulatory probe into price controls placed on the UK electricity market has concluded with only minor adjustments to Ofgem’s original settlement. The Competition and Markets Authority confirmed in March that it would consider two appeals against the settlement, which was announced last November. Northern PowerGrid (NPg) a district network operator (DNO) brought forward three grounds of appeal against Ofgem’s decision to modify its licence. NPg believed its settlement was not generous enough, but the CMA only upheld one of its complaints. The resulting variation means NPG will be able to increase allowable revenues by £11 million, a relatively small sum given the price control period is in place for eight years. British Gas Trading brought a five-pronged appeal against the modification of 10 DNO licences, including two held by Perth-based utility giant SSE. Again, only one of the grounds of the appeal was partially upheld by the CMA. The variation relates to up-front rewards and penalties for DNOs through the information quality incentive scheme. The CMA determination means a reduction of £105m in the amount the 10 DNOs can recover over the price control period through to 2023. For SSE it means that Southern Electric Power Distribution and Scottish Hydro Electric Power Distribution will lose a combined £2m in revenues over the next eight years. The firm’s networks business currently produces revenues in excess of £1.2 billion annually. “We welcome the conclusion of this appeal process, and in particular the validation of the RIIO-ED1 price control process as representing value for money for customers,” Colin Nicol, managing director, networks, at SSE said. “As we stated in December 2014 when accepting the price control settlement, we remain committed to delivering improved network performance and customer service over the price control period while also providing a fair return to investors. “The conclusion of the appeal process will allow us to focus on doing just that.” Ofgem said it welcomed the outcome of the CMA investigation and said the price control mechanism will deliver £24.6 billion of investment in the energy network in the coming eight year period.