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.
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Industry news
Bulb bows out to mixed applause
Monday, August 31, 2009
It is light, bright and has been around for 120 years. But from Tuesday the 100 watt bulb bows out from Britain. Under new EU rules the manufacture and import of 100 watt bulbs and all frosted bulbs will be banned in favour of the energy-saving variety.
According to the Energy Saving Trust, compact fluorescent lamps (energy-saving bulbs) use 80% less electricity than standard bulbs.
They could also save the average household £590 in energy over their lifetime of between eight and 10 years, and if all traditional bulbs were replaced, the carbon saving would be the equivalent of taking 70,000 cars off the road.
Good reasons. But while cutting carbon and cheaper bills might entice many, others are less happy.
Commonplace complaints about the new bulbs include they take too long to warm up, they are ugly, they give off poor light and they contain mercury - making them potentially hazardous and hard to get rid of.
And according to campaigners, energy-saving bulbs can trigger migraines, exacerbate skin conditions and lead to other serious health problems.
When many retailers, including most supermarkets, announced they were signing up to a voluntary scheme to phase out traditional incandescent bulbs in January - ahead of the September deadline - there was wide-scale panic buying.
Supermarkets reported a massive run on the traditional type, while the Daily Mail gave away 25,000 incandescent light bulbs in "outrage at further European intervention in British affairs".
One opponent, Glynn Hughes, from Preston, decided he couldn't face life without 100 watts.
"I've bought a 15-year supply of the old-fashioned, incandescent light bulbs," he told the BBC.
"I reckon in 15 years people will have worked out that these things aren't good for you and we'll be able to buy as many as we want of the old ones."
It is, he believes, a question of human rights.
"It's totally unfair. As human beings we are entitled to choose whether we believe the, some might say rumours, of the danger of low-energy light bulbs or whether we ignore it.
"At the moment we've got the choice. As of 1 September, we've no choice."
Health concerns
For some, the ruling could have serious side effects.
David Price, of Spectrum, an alliance of charities working with people with light-sensitive health conditions, says the government is "disregarding" public concerns.
"Health is important and it should come over anything else, but they're not looking after ours," he said.
Lee Tomkins, director of Migraine Action, is urging sufferers to stockpile the old-fashioned bulbs before retailers run out, while the the Royal National Institute of Blind People suggests using tungsten halogen bulbs instead of energy-saving bulbs in hallways and stairs.
However, the Department for Environment, Food and Rural Affairs denies they are a risk, saying the new bulbs are now "flicker free".
"CFL bulbs used to operate at mains frequency (50Hz) they are now designed to operate at 1,000 times that frequency," a spokesman said.
Claims of poor lighting were also untrue, he said.
"The light is bright and clear and tests conducted by the Energy Saving Trust suggest that the majority of people cannot tell the difference between the light of a new CFL and an incandescent bulb."
He also said EU health experts had concluded that there was not enough evidence to suggest the modern lamps could aggravate epilepsy or migraines.
Even so, says Lee Tomkins: "Be sensible and use the old incandescent bulbs where you can.
"The new low-energy bulbs, particularly the ones in coils or rings, trigger people's migraines."
She added that the charity was in talks with light bulb manufacturers who had been "fantastic" and trials were planned later this year to try to see "if any of the new light bulbs could be adapted to be suitable".
Meanwhile, shopkeepers are reporting many are indeed stockpiling 100 watt bulbs, although a quick search of the internet shows there are still plenty for sale.
Lesley Urrutia, of Pilton Electrical in Cardiff, said customers - many elderly - appeared to be panic buying.
"Normally I might sell 10 - but I'm selling more than 80 a day," she said. "It's good for business but there is no need for people to panic."
This article was featured on the BBC News website.
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Energy groups accused of pressuring small firms
Friday, August 21, 2009
Britain’s big energy companies are forcing as many as 250,000 small businesses to pay for their energy up to seven months in advance, it has emerged.
Alistair Buchanan, chief executive of Ofgem, the energy regulator, called the companies — including Scottish Power, British Gas, EDF Energy, E.ON, RWE npower and SSE — to a meeting in London last week to express mounting concern about the practice, which it is feared could put companies into real difficulty.
Stephen Alambritis, at the Federation of Small Businesses, estimates that about one million of Britain’s 4.7 million small and medium-sized businesses have been contacted by their energy companies in recent months and informed of tougher payment conditions — in a move designed to help to shield suppliers from the impact of the growing number of companies entering insolvency.
About a quarter of those — or 250,000 small businesses employing 2.5 million people —have been asked to pay an element of their bills upfront, Mr Alambritis added.
Scottish Power, E.ON and British Gas are among those to have tightened their credit conditions recently.
Nick Campbell, an energy trader at Inenco, the consultancy, estimates that UK companies are now being forced to pay up to £350 million in advance for their energy. He said that suppliers appeared to be targeting businesses by sector, and that industries heavily exposed to the downturn — such as manufacturing, carmaking, construction and retail — were particularly hard hit.
“There is less risk appetite where these businesses are concerned,” said Mr Campbell. “The vast majority of businesses in these sectors could expect to be hit by these restrictions.”
About 40,000 UK companies are expected to enter insolvency during 2009, a 62 per cent increase on 2007.
Jeremy Nicholson, director of the Energy Intensive Users Group, the lobbying organisation, said some companies in the ceramics industry had been asked to pay seven months’ worth of their energy bills upfront — a trend that he described as “beyond belief” in the current environment.
The problem has intensified because credit insurers, which pay the bills of companies that are insolvent, have withdrawn from certain industries amid a surge in business failures.
David Cockshott, head of corporate sales at RWE npower, said that as many as 60 per cent of new customer applications were now being rejected by trade credit insurers, up from 5 per cent two years ago.
The lack of cover has prompted energy companies both to demand deposits and to seek payment of invoices in as little as five days — or customers face having their supplies cut.
Mr Alambritis said he was “very concerned”. “The energy companies have started using some very aggressive tactics. They have been concerned by the high level of bankruptcies ... But asking for money upfront puts businesses in an even more precarious situation.”
The problem is set to worsen in the coming weeks as businesses traditionally sign new contracts with their suppliers in the autumn — and the conditions imposed by energy companies since October 2008 are far tougher.
Roger Salomone, energy expert at the Engineering Employers Federation, said that 75 per cent of businesses sign new energy contracts in October. “You could be putting potentially viable businesses into real difficulty.”
This story was featured on The Times Website.
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Microsoft and Nokia target corporate market
Monday, August 17, 2009
Microsoft and Nokia on Wednesday announced an alliance aimed at challenging Research In Motion’s lead in the corporate mobile phone market.
The Finnish mobile-phone maker is planning to use Microsoft’s Office Mobile suite of software on its smartphones – mobiles that double up as mini computers. Nokia’s E-series of phones, aimed at business users, will be the first to feature the software next year. Later it will be extended to the wider portfolio of handsets.
The partnership would help buttress Nokia’s lead in the smartphone market. The world’s largest mobile-phone maker has been losing market share to rivals, led by RIM.
“This is about creating a formidable challenge for RIM more than anyone else,” said Kai Öistämö, Nokia’s executive vice-president for devices.
Nokia saw its share of the smartphone market decline to 45 per cent in the second quarter of 2009, from 47.4 per cent a year ago, according to figures released on Wednesday by Gartner, the research firm. In the same period, RIM’s smartphone market share rose from 17.3 to 18.7 per cent.
RIM has carved out a strong position in supplying smartphones to business people, partly because the Canadian handset-maker’s BlackBerry devices have user-friendly e-mail. Microsoft’s Office Mobile, which offers e-mail, word processing, PowerPoint and spreadsheets that will synchronise easily with desktop PC systems, could boost the appeal of Nokia phones.
Microsoft’s popularity with US consumers may also help Nokia in the North American market, where it is struggling.
For Microsoft, the deal will be a way to extend its Office franchiseand ensure it remains relevant for consumers as the lines between computers and mobile phones increasingly blurs.
Microsoft’s Office suite is under threat from Google, which offers productivity software for free on the internet. Google’s Android operating system for mobile phones is also gaining traction in the market.
Microsoft has its own mobile phone operating system, Windows Mobile, but has failed to capture a leading position. Microsoft’s share of the mobile operating system market dropped to 9 per cent in the second quarter, from 12 per cent a year earlier.
Putting Office on Nokia’s rival platform appeared an admission by Microsoft that Windows Mobile was struggling, said Carolina Milanesi, analyst at Gartner, the research firm.
Stephen Elop, president of Microsoft’s business division, admitted it was a big strategic decision for them to move off Windows Mobile, but said: “From a Microsoft perspective, this is a significant strategic evolution. But let there be no doubt about it – Windows Mobile is an important strategic bet for Microsoft.”
Despite the competition between Microsoft’s Windows Mobile and Nokia’s Symbian operating system, the two companies have a track record of collaboration. Last year Microsoft and Nokia announced a deal making it easier for the Finnish company’s smartphones to access e-mail running on Microsoft’s Exchange servers.
This is also the second big computer-sector alliance Nokia has announced in the last few months. In June the Finnish company unveiled a research deal with Intel, the US computer chipmaker, aimed at developing product bridging the gap between computer and phone. Nokia have also hinted it would like to develop a netbook, or small, low-powered laptop computer.
“It could be laying the groundwork for a deeper transformation of the business to something more computer-like,” said Ben Wood, analyst at CCS Insight, the technology consultancy.
News of the deal came as a US federal court ruled that Microsoft would have to pay more than $290m in damages to Canadian software firm i4i for infringing a patent. The Toronto-based company claimed Microsoft Word and the Vista operating system violated one of its patents.
This story was featured on the Financial Times website.
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Scotland eyes carbon-capture for North Sea
Monday, August 17, 2009
Scotland-based companies and the government at Holyrood hope proximity to the rapidly-depleting oil and gas fields of the North Sea will put the country at the forefront of a potentially lucrative new industry – storing carbon dioxide.
The UK government believes carbon capture and storage (CCS) is essential for curbing greenhouse gas emissions and it plans to back up to four “clean coal” power stations using the technology, which is still being developed.
By this process, the CO2 will be removed, compressed, then piped to be stored in underground reservoirs – such as old oilfields.
The potential value of the global market for carbon abatement technology will be between £2bn to £4bn by 2030, according to an independent study released recently by the Department for Energy and Climate Change.
ScottishPower announced last week that Shell and National Grid were to join its CCS consortium, which recently switched on a prototype carbon-capture test unit at Longannet power station in Fife – the first time anywhere in the UK that carbon capture technology has been put to work on a coal-fired power station.
Ignacio Galán, chairman of Iberdrola, the Spanish energy group that owns ScottishPower, reckons the UK could lead the world with CCS technology, which can cut emissions of carbon dioxide by coal-fired power stations by up to 90 per cent.
“There is the potential to [form] an industry on the same scale as North Sea oil – and we will invest in Scotland and the UK to help realise this potential,” he said.
Nick Horler, chief executive of ScottishPower, said: “Shell’s experience of working offshore in the North Sea is clearly critical – not only in terms of the potential for CO2 storage in depleted oil and gas reservoirs, but because transport and storage of CO2 will demand many of the same engineering and subsurface skills on which the oil and gas industry has depended for many decades.”
Chris Train, National Grid’s director for network operations, said his group’s expertise in high pressure gas pipelines made it the natural partner in CCS projects.
“The Longannet project also presents a potential opportunity to reuse some of our existing natural gas transmission pipelines in Scotland for carbon dioxide transportation as North Sea gas supplies decline, helping the scheme to a running start,” he said.
On the other side of Scotland, Renfrew-based Doosan Babcock last month opened a test facility to demonstrate its clean combustion technology on a full-size 40MW burner. Its OxyCoal system is a process by which coal is burned in an atmosphere of oxygen and recycled flue gas to give an output of concentrated carbon dioxide that can be piped away and injected into underground stores.
Doosan Babcock specialises in making advanced boilers for the power industry, and the project’s prime sponsor is Scottish and Southern Energy.
The facility was opened by Joan Ruddock, energy minister, who said cleaning up coal power was essential if the UK was to meet its climate change goals while keeping the lights on.
“The development of CCS offers high-quality jobs and export opportunities for the UK which is why we’re supporting this OxyCoal project with £2.2m of funding,” she said.
“Our proposals on coal are some of the most radical in the world and will help ensure the UK leads the way on CCS.”
Iain Miller, chief executive of Doosan Babcock, said that with his group’s portfolio now including pre-combustion, OxyCoal and post-combustion technologies, it would be ready to deliver low-emission power technology to its customers worldwide as fast as the market for these products became available.
Ian Marchant, chief executive of Scottish and Southern Energy, said the government’s recently announced Low Carbon Transition Plan set a great deal of store by the successful deployment of CCS technology.
“The pace of progress in recent years has been disappointing – but I hope renewed impetus from government allied to the type of co-operation evident in the OxyCoal project will bring us closer to the ultimate goal of successful deployment of large-scale carbon capture and storage technology here in the UK and elsewhere,” he said.
The Holyrood government has published a joint industrial and academic study that found all the carbon dioxide produced by UK coal-fired plants during the next 200 years could be stored under the Scottish area of the North Sea.
Alex Salmond, first minister, said: “The potential Scottish capacity is of European significance, comparable with that of offshore Norway, and greater than the Netherlands, Denmark and Germany combined.”
But the Scottish National party leader said the benefits of carbon capture could go far beyond the environment.
“Electricity generated in Scottish power stations which are fitted with carbon capture technology will be comparable in price to energy generation using other low-carbon technology,” he said.
“The development of CCS in Scotland – including power stations and storage networks – has the potential to support 10,000 jobs.”
Thias story was on the Financial Times website.
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EDF power price curb could hit UK nuclear reactor plans
Monday, August 10, 2009
Nuclear reactors that are essential for Britain’s future energy needs are in jeopardy, according to analysts, because EDF will not be able to afford to build them.
Pierre Gadonneix, chief executive of EDF, wants electricity prices to be increased by 20 per cent over three to four years to fund investments. Last week, however, the French Government proposed a 2.3 per cent average increase in electricity prices on regulated tariffs over the next three years.
EDF’s four proposed British nuclear reactors, including Hinkley Point, Somerset, where work is due to start in 2013, could become casualties of the decision.
Peter Wirtz, European utilities analyst at West LB in Frankfurt, said: “If EDF cannot finance its investment programme they will have to think about cutting back some of their plans.”
Nick Campbell, an energy analyst at Inenco, said: “This could be extremely detrimental for the future security of UK energy and lead to an increase in wholesale prices. The effect could ripple across the English Channel and lead to a delay or mothballing of EDF’s four proposed UK nuclear reactors.
"If EDF is struggling to cover costs at home, it is unlikely they will have the funds to take on such large-scale projects abroad.”
EDF’s proposed reactors have been seen as crucial to counteract the loss of generation capacity in Britain from 2015 because of the decommissioning of nuclear reactors and coal-fired units due to be retired from service.
The French Government’s pricing proposal to the Commission de Régulation de l’Energie, the French regulator, could be agreed as early as August 15, according to French sources.
EDF, which operates 58 reactors in France, said that it needed to increase prices to finance planned investments of €7.5 billion (£6.4 billion) in 2009, €2.5 billion more than in 2008.
The group has already announced plans to sell €5 billion of assets by the end of 2010 to help to fund the programme.
Sofia Savvantidou, European utilities analyst for Citigroup, said that there were other options open to EDF: “If necessary, they could sell off stakes in their nuclear plants to financial investors or infrastructure funds. It’s not an immediate threat, but obviously if we don’t see an acceleration of the tariff changes then that becomes a problem.”
She said that the 2.3 per cent tariff increase would raise €560 million more for EDF, whereas a 20 per cent tariff increase would be worth up to €5 billion.
A spokeswoman for EDF said that the group’s activities in France were entirely separate from Britain. She said that planned nuclear investments in Britain would be “self-financing” but declined to comment further.
This story was featured on The Times website.
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Energy bills 'must be accurate'
Friday, August 07, 2009
Energy companies have been told by their regulator, Ofgem, that they must calculate their customers' direct debit payments more accurately.
The regulator has responded to widespread complaints that energy firms have been setting direct debit bills too high.
Cash surpluses built up by customers eventually offset subsequent bills.
But consumer organisations have accused energy firms of using excessive direct debit income as an interest-free loan.
"Ofgem reviewed the direct debit arrangements of the six major suppliers after customers complained about significant increases in amounts they were being asked to pay", the regulator said.
"The new condition in suppliers' licences would mean they must ensure payment levels are clearly and accurately explained and based on the best available information.
"Suppliers will also need to be able to justify why they are holding onto credit surpluses built up by a customer," the regulator added.
Better explanation
The curbs on excessive direct debit bills will come into force this winter.
They will affect the bills of the 40% of energy users who pay their bills this way.
In March this year, Ofgem published an initial report on its investigation into the direct debit complaints it had been receiving.
These first emerged last autumn.
Peter Luff, MP for Mid Worcestershire, accused firms of raising direct debit payments even when their customers' accounts were in credit.
The consumers' association Which? subsequently accused energy firms of milking their direct debit customer base.
But Ofgem concluded that there was no evidence that gas and electricity firms had been systematically setting their direct debit charges too high.
Instead, the regulator said that firms should make better efforts to explain their billing calculations to customers.
A spokeswoman said this was still its view and there had been no change in its policy.
But after a consultation exercise it wanted to change formally the licences of the energy firms so that if there were any problems in the future it could take swift action.
"We will be watching the situation very closely," said the spokeswoman.
This story was featured on the BBC news website.
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Electric bills to rise by 5% to repair network
Monday, August 03, 2009
Ofgem, the energy regulator, today said that the average household bill will have to rise by nearly £4, or 5 per cent, every year until 2015 to fund £6.5 billion in repairs for the ageing electricity network.
The increase means that by 2015 household bills will, on average, be £18 higher than in 2009, equating to a 27 per cent rise in the distribution portion of the bill over the five years.
However, the figure - which covers investment in power lines between the home up to the main backbone grid running over pylons - is 17 per cent lower than the combined investment plans Britain's operators submitted this year and requires businesses to cut operating costs 10 per cent below their own combined forecasts.
Britain's electricity distribution network is divided into 14 regional monopolies run by companies including CE Electric, Scottish Power, Scottish & Southern Electricity, US owned Western Power Distribution, E.ON and EDF Energy. Customers rely on Ofgem rather than competition to control their bills.
Ofgem said about three quarters of the money was necessary to replace cables and transformers installed in the 1950s and early 1960s. The rest will upgrade networks in parts of cities were demand has risen in recent years. It will make its final decision on the proposals this winter after the usual lengthy haggling with the utilities.
Alistair Buchanan, chief executive of Ofgem, said: "We have accepted the companies' investment plans, but told them to deliver them at much lower cost. In return for higher prices we expect even better customer service and reduced carbon emissions."
He said the companies would face penalties for failing to meet new service standards when they connect new customers.
On top of the £6.5 billion investment, Ofgem is also proposing to allow operators to levy a £500 million "Low-carbon Networks Fund" to allow large-scale trials of advanced technology.
It would include creating systems that allow customers with wind turbines or fuel cell boilers to sell their own generated electricity to the grid. It could also fund trials of charging points in cities to allow people to reharge electric vehicles and supply surplus power to the grid.
The companies must outline proposals to Ofgem if they want to make use of the fund. Ofgem hopes the utilities will team up with other companies in consortia to trial major projects that might cover an entire town.
Steve Smith, Ofgem's managing director for networks, pointed to the "Smart Grid City" being run in Boulder, Colorado, in the US, which uses "smart meters" to allow customers to control their use of power. "We would love to see companies bid to trial something like that across an enitre town," he said.
This story was featured on The Times Website.
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