Utility news
On this page you will find industry news about electricity, renewable energy, gas, water, fixed and mobile telecoms, and other stories. Our news is updated once per month. We cover items such as developing technologies, price changes in the utility markets, takeovers and company collapses, changes in tariffs, the results of investigations by the regulators and market trends.
Please take time also to visit our Business Cost Consultants news page, where we will keep you up to date with developments in Business Cost Consultants, and coverage we have had in news and trade press.
If you would like to be kept up-to-date with utility news, you can join our list of free monthly newsletter subscribers; just go to the Newsletter sign-up page. You can unsubscribe at any time.
- See the Newsletter sign-up page.
Industry news
Ofgem wants powers to probe grid use
Monday, March 30, 2009
Ofgem, the energy regulator, is seeking new powers to investigate and fine electricity companies for market abuse to address growing concerns that generators are exploiting weaknesses in the system to push up prices.
In a consultation paper published on Monday, Ofgem warns that the need to manage the electricity grid makes it possible for generators to push up wholesale prices.
Ofgem estimates that customers may have paid up to £125m ($178m) too much for their electricity in the past financial year as a result of market exploitation.
The possibility of market abuse is created by the need to balance supply and demand on the grid.
When supply falls short, generators must be paid by National Grid, which operates the system, to bring more power stations online. Conversely, they are paid to take power stations offline.
Ofgem’s concern is that companies can choose when to run power stations to create excess demand or supply on the grid and create conditions where they will receive those payments.
The problem appears to be growing. In 2005-06, the cost of payments needed to balance the system was £84m. In 2008-09 it was £238m, and in 2009-10 it is expected to rise again to £258m.
The potential for manipulation is greatest in regional markets that have limited connections to other sources of electricity.
In April last year, Ofgem launched an investigation into Scottish and Southern Energy and ScottishPower after “a formal complaint alleging abuse of a dominant position in the electricity generation sector”.
In January, it abandoned that investigation but said its inquiries had raised “concerns” and it would look for new ways to address them.
Monday’s paper suggests several possible remedies but Ofgem’s favoured solution is a change to the licence obligations that generators must comply with to be allowed to operate.
The new powers would enable Ofgem to investigate short or excess supply it considers suspicious, and to impose fines if it believes there is market abuse
This story was featured on The FT Website
Permanent link for this article
Wales terminal takes first delivery of gas
Saturday, March 21, 2009
The first cargo of gas was delivered yesterday at a new terminal in south Wales - part of the world's most expensive energy project and capable of supplying a fifth of Britain's demand.
The arrival of liquefied natural gas from Qataropens up a source of supply that will play an increasingly important role in meeting Britain's energy needs.
The additional gas will put further downward pressure on the wholesale price of gas in the British market, which has plunged over the past six months, raising hopes of further cuts in retail prices.
The construction of the South Hook terminal at Milford Haven, Europe's biggest LNG facility, was hailed by Ed Miliband, the climate change secretary, as a boost to energy security.
However, the terminal has been unpopular with residents because of safety fears, although the LNG industry boasts an excellent safety record.
The LNG will be stored in up to five vast tanks, each bigger than the Albert Hall, and capable of holding enough gas to supply the UK for eight hours.
This story was featured on The FT Website
Permanent link for this article
ScottishPower plans £500m power station
Thursday, March 12, 2009
SCOTTISHPOWER has unveiled plans for a new gas-fired power station in Kent, capable of supplying electricity to more than 1.5 million homes.
The £500 million project – Damhead Creek 2 – would see the construction of a 1,000Mw station alongside ScottishPower's existing Damhead Creek facility, near Hoo, more than doubling the site's capacity.
Yesterday, the Glasgow-based company, part of Spanish utility giant Iberdrola, said construction of the plant would create up to 1,000 jobs over three years, while the completed station would employ 50 people, injecting some £27m a year into the local economy.
The plant requires approval from the Department of Energy and Climate Change, with ScottishPower planning to apply for permission before the summer.
ScottishPower chief executive Nick Horler said the site next to its existing plant, which has been in operation since 2001, was ideally situated, and there was a need to invest in generation.
Horler said: "There is an immediate need to invest in new generation plants in the UK as older power stations come towards the end of their operational lives."
The group said its plans for the new station would allow for the easy addition of carbon capture technology.
ScottishPower generates about 2,000Mw from Damhead Creek and its two other gas powered stations, Hoddeston in Hertfordshire and Southwick in West Sussex.
This story was featured on The Scotsman Website
Permanent link for this article
Eon to divest as recession stifles demand
Wednesday, March 11, 2009
Shares in Eon, Germany’s largest energy company, tumbled on Tuesday after it warned that adjusted net income would fall by 10 per cent this year as the recession saps European demand for electricity and gas.
The Düsseldorf-based utility warned future earnings would be hit by interest expenses on its enlarged debt pile, higher regulatory costs and the weakness of currencies such as the British pound and Swedish krona
The downbeat outlook underscored a growing concern that European utilities are not immune from the economic slowdown because struggling industrial customers are cutting their energy consumption and financing costs remain elevated.
Power demand from some industrial users such as car and steel manufacturers has dropped by more than 20 per cent and Eon did not rule out that customer bad-debt could also become a problem
Accordingly, the company cut a previous forecast for 2010 adjusted earnings before interest and taxation from €12.4bn to €11bn, a figure that does not include future divestments.
“In view of the current financial and economic crisis, we don’t intend to issue rosy forecasts that are based on hardly plausible or creditable assumptions about parameters like future demand and energy prices,” Wulf Bernotat, chief executive, said.
Eon is looking to consolidate and cut costs after a period of rapid expansion in which it acquired OGK-4, the Russian power company and added a string of European assets after resolving an unsuccessful bidding war for Endesa, the Spanish group.
The company intends to divest at least €10bn of assets by the end of 2010, subject to the situation in the capital markets.
Eon warned last month that it would take €3.3bn in charges related to its operations in Italy and the US and cut its investment programme by about €6bn between now and 2011 “in view of the significantly more difficult economic environment”.
Full-year adjusted earnings before interest and taxation, depreciation and amortisation increased by 8 per cent to €13.4bn, on sales which jumped by 26 per cent to €86.8bn. Earnings per share dropped 82 per cent to €0.68
The shares fell an initial 10 per cent, but were down 6.3 per cent on the day at €18.94 in afternoon trading.
This story was featured on the Financial Times Website
Permanent link for this article
