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Energy bills 'are full of jargon'
Thursday, September 24, 2009
Energy bills are filled with jargon such as "calorific value" and "normal primary units" that make them tough to understand, campaigners say.
The language used by energy companies made it difficult for customers to understand how much they owed, the consumers' association Which? said. It wants summary boxes on bills to outline key information.
But the body that represents the energy suppliers said that bills were being made clearer.
The Energy Retail Association (ERA) said that customers would be receiving an annual statement on their energy use by the end of next year.
"Energy companies issue over 200 million bills each year and suppliers continually work to improve the clarity of information to customers," said ERA's chief executive Garry Felgate.
The survey of nearly 4,000 Which? members found that gas and electricity bills were more difficult to understand than other household bills, such as credit card and mobile phone demands.
The Plain English Campaign found clarity problems regarding all eight suppliers' bills it was asked to check, describing some of the language as "gobbledygook".
One bill used a minus sign to denote that a customer was in credit, and terms such as "calorific value" - the quality of the gas a customer receives - were not widely understood.
Which? described the use of this language as "insulting" to customers who needed to understand their bill for financial and environmental reasons.
"When you hear the term 'calorific value' you are more likely to think about a diet than your energy bill, but this is the kind of language that is being bandied about. This makes it a struggle for customers to understand their bills," said Martyn Hocking, editor of Which? magazine.
"Consumers are not going to be able to reduce their energy use or find the best deal if they do not understand what is going on."
Mark Todd, of switching site Energyhelpline, said most people just looked at the amount on the bottom of their bill to see if it was changing month to month.
"If people do not understand their bill then the whole energy supplier situation is out of control for consumers," he said.
"They are hard to compare and people do not know if they are getting the correct bill or not."
This article was featured on the BBC News website.
Please see Business Cost Consultants' glossaries, which you should find useful. Please contact us if you are struggling with any other utility-related terms. We're here to help!
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Scots emissions 'down by fifth'
Tuesday, September 22, 2009
Scottish greenhouse gas emissions fell by almost a fifth between 1990 and 2007, official figures suggest.
The biggest falls were from energy suppliers and the public sector, but the number of greenhouse gases produced by aviation and shipping grew.
The Scottish Government is committed to a 42% reduction in harmful emissions, from the 1990 level, by 2020.
Climate change minister Stewart Stevenson said meeting that target would still be a challenge.
The figures for greenhouse gas emissions in Scotland indicated that total emissions, including international aviation and shipping, were 56.9 million tonnes CO2 equivalent (Mt CO2e) in 2007, compared with 61 MT CO2e in 2006 - a 6.8% drop.
'Making progress'
This meant that compared to the 1990 baseline of 70 Mt CO2e, greenhouse gas emissions in Scotland had fallen by 18.7%.
Mr Stevenson said: "These figures for 2007 are good news, which show that we are making continued progress in reducing our emissions against the 1990 baseline.
"However, the data also demonstrates the size of the task now facing us - and the rest of the world - in reducing emissions.
"The Scottish Government's commitment to making progress is demonstrated by the fact that, in the past year, we have passed our own world-leading Climate Change Act, which clearly sets out the government's commitment to making the changes we need."
Dr Richard Dixon, director of environmental campaign group WWF Scotland, said: "There are big challenges to change transport policy, insulate more homes faster and reduce emissions from farming, but our targets are exactly the sort of level that every industrialised country needs to aim for if we are to head off the worst extremes of climate change."
Sustainable transport organisation Transform Scotland welcomed the figures, but said there was "no chance" of meeting climate change targets while emissions from the transport sector continued to rise.
This story was featured on the BBC News website.
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Scottish Power at war with Ofgem
Monday, September 21, 2009
Tensions over how to finance the multi-billion-pound overhaul of Britain’s electricity networks boiled over this weekend when the boss of Scottish Power threatened to take Ofgem, the regulator, to the Competition Commission over proposed spending cuts.
The regulator has issued a draft spending and revenue programme for the electricity companies, fixing their investment in 2010-15 at £6.5 billion, 17% less than they requested. Ofgem has not, however, cut its requirement for improvements to the networks.
Energy bosses reacted angrily, saying they were being asked to shoulder the responsibility for much of the government’s ambitious plans for a low-carbon future but to do it on the cheap.
They are to meet Alistair Buchanan, chief executive of Ofgem, over the next few weeks to make their final pitches for a better deal for 2010-15 before the regulator’s final decision in December.
Nick Horler, chief executive of Scottish Power, said he was prepared to take the unprecedented step of going to the Competition Commission unless the regulator changed its mind. “Ofgem is playing yesterday’s game, which was sweating these assets and bringing costs down,” he said.
“We are at a point where we need to make big new investments. Ofgem has taken a very narrow view of economics and we may have no recourse but to go to the commission.”
Many of the networks, which are regional monopolies, were built in the 1950s. They need a radical overhaul to accommodate wind farms, new nuclear stations, small household generators and other technology. “We can cut carbon, we can cut costs, but we can’t do both,” said John Crackett, networks chief at Eon.
“We need to have fair returns that are attractive to investors. If they are not attractive, we are not going to reach the [government] goals because companies won’t invest.”
If the draft decision is rubber-stamped by Ofgem, there could be a wave of disposals by companies unwilling to invest billions for small returns.
Ofgem has not told the firms what their allowed profits will be. Andy Cox, energy partner at KPMG, the accountant, said: “A number of players are looking again at their networks and considering whether in a capital-constrained world the returns allowed for the next five years will be sufficient.”
Steve Smith, head of networks at Ofgem, said the regulator was not trying to starve the networks of money. Network charges are set to increase by 25% between 2010 and 2015, he said, and the firms had made big profits since privatisation.
“We have 14 networks, and some of them say it is going to cost a lot more than others to do the same thing. So we have challenged that quite hard,” he said. “If they disagree they can, of course, go to the commission as an independent referee.”
This story was featured on the Times Website.
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Green energy hit by 'faceless Nimbys'
Thursday, September 17, 2009
Last month, the government announced plans to boost the green energy sector, yet within weeks Vestas UK, the UK's only manufacturer of wind turbine blades, closed its plant on the Isle of Wight. The Report's Simon Cox examines the obstacles which could prevent the government's green rhetoric turning into reality.
The closure of the Vestas plant on the Isle of Wight saw workers stage an 18-day sit-in that gained worldwide attention at the very time the government announced a new vision for energy to reduce the UK's carbon footprint.
Some workers said the government should have rescued the plant like it saved failing banks.
But Vestas' vice president Peter Kruse has a clear idea who is responsible for the lack of a viable UK renewable energy market.
"You have some of the best onshore sites on the planet but they are strong, the faceless Nimbys [not in my back yards]," he told The Report.
"Don't blame London, because your government is doing a lot, but if people do not want turbines locally then you can put as many incentives as you want on the table."
The Vestas decision created a dilemma for people on the Isle of Wight as there were those who opposed the siting of wind turbines on the island - projects which might have saved the jobs of the Vestas' workers.
The local council refused to give planning permission for a wind farm; and John Gallimore, chair of local campaign group Thwart, believed that there were other environmental arguments which deserved an airing.
"I don't think you need to put wind turbines in an Area of Outstanding Natural Beauty just to show there is a market for Vestas blades," he said.
"Areas of Outstanding Natural Beauty have got the highest level of protection under UK planning law, so I don't think you can ride roughshod over those kind of planning constraints."
Richard Mardon, managing director of Your Energy, one of the UK's largest independent wind farm developers, believes local protest groups around the country are hampering the development of wind power.
He said the Isle of Wight's council's veto of the wind turbines symbolised the English planning system, where the success rate for getting wind turbine applications approved by English councils was 20 to 50%.
However, the Secretary of State for Energy and Climate Change, Ed Miliband, said he was confident that "Nimbyism" could be overcome.
"I think we are going to be able to say to people, whether it's in relation to offshore or onshore wind power, 'if you want to be a centre for green manufacturing then we have to go ahead with the actual generation of wind power'," he told The Report.
He added: "I actually think people will be persuaded over time and I suspect in 10 years' time people will look back and think, 'gosh, there was a huge fuss about this idea of renewable energy and wind energy but actually it was the right thing to do'."
'Bribes' needed
Other countries in the EU have softened the impact on local communities with cash incentives.
In Portugal, where 15% of power is produced by renewable energy (and they are on target for more than 30% by 2020), local municipal authorities were given a 15% stake in wind power companies and some had sold these shares at large profits, benefiting their communities.
It is this kind of "bribe" that the UK needs to use, according to Chris Goodall, author of Ten Technologies To Save The Planet.
"By bribe I do not mean a handout, but improving the local infrastructure for communities where wind turbines are situated. We have done this in the past with the Shetland Isles when we were developing North Sea Oil."
But according to Mr Goodall there is another factor that is restraining the UK's use of renewable energy - we do not think big enough.
He told The Report that the UK could build 5,000 wind turbines in the next year which would have a significant effect on its energy supply but the political will was lacking.
Mr Goodall said the country had lost the vision of the kind of grand engineering projects the Victorians managed.
"We've completely lost it - we've been sucked into writing reports but doing nothing."
This story was featured on the BBC News website.
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Mis-sold mobile crackdown starts
Wednesday, September 16, 2009
Measures to crack down on the mis-selling of mobile phone contracts have been brought into force by the communications regulator Ofcom.
Firms face simpler rules which could lead to them being fined up to 10% of turnover if they mis-sell.
A voluntary code of conduct failed to reduce complaints.
Cashback offers, when customers buy a handset up front and then are refunded the cash over the course of the contract, are under scrutiny.
Restrictive terms and conditions, which were often difficult to understand, meant some of these customers had failed to receive money they were expecting. Other retailers have gone bust, leaving customers without their money, Ofcom said.
Examples
The regulator is demanding that companies offer accurate information when customers sign up for a contract.
Ofcom said other examples of mis-selling complaints from consumers had included:
Finding themselves signed up to a more expensive tariff than agreed at point of sale
Upgrading their 12 month contract believing they were signing up to another 12 month deal, but then finding themselves entering into a new longer contract
Signing up to a service after being told coverage in their area is good, but then finding that they have little or no reception.
The regulator said it would now be monitoring communications providers' adherence to the rules.
Different rules for the providers of landlines will be introduced on Thursday.
This story was featured on the BBC News website.
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Firm wins major wave energy deal
Tuesday, September 15, 2009
A Teesside firm has won a "major" contract to help a Norwegian company create wave energy systems.
The Tees Alliance Group is to undertake development work for Langlee's energy convertors at its shipyard in Haverton Hill, near Billingham.
It is hoped the technology will be adopted in the UK waters shortly after completion of the work next year.
The contract comes just months after the firm lost a £300m deal to construct an oil rig as part of a consortium.
Hopes of creating more than 1,000 jobs on Teesside were lost when Seadragon Offshore terminated its contract with the consortium and moved the work to a site in Singapore.
Alex Dawson, managing director of the Tees Alliance Group, said the wave energy deal would help the firm "bounce back".
He said: "We are very impressed with the Langlee system and believe this to be the perfect product for the emerging worldwide wave market.
"We are very pleased to have been invited to join the team and look forward to working closely with Langlee to achieve their goal of securing a sale of a full-scale Langlee E2 for installation in 2010."
This story was featured on the BBC News website.
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Powles plans English raids
Tuesday, September 15, 2009
Once granted a licence from Ofwat, the business supply of Scottish Water is set to move into the English market
Business Stream, the business supply arm of Scottish Water, is set to make its first move into the English market when it receives a licence from regulator Ofwat next week.
Mark Powles, the chief executive, said the licence would pave the way for Business Stream to grab a significant share of the £1.2 billion English and Welsh retail water market if, as expected, it is opened up to full competition. At present, competitive supply south of the border is open only to the 2,500-or-so companies meeting specific criteria.
“In a targeted way we are starting to look at the opportunities in England and Wales,” said Powles, who added that Business Stream was talking to companies in the deregulated section of the market.
“We have decided to get a licence now, not necessarily to go in and win a lot of customers at the moment, but if we can get a seat at the table there is a lot of potential.” The Cave report, commissioned by the UK government, has recommended that the business water market south of the border be opened up to competition. The market in Scotland was the first in the world to be deregulated when it was opened up 18 months ago.
Ofwat, which regulates the water industry in England and Wales, said it would make an announcement on Business Stream’s application shortly.
This story was featured on The Times website.
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Bglobal in Gazprom deal
Tuesday, September 15, 2009
Gazprom, the Russian energy group, has signalled its intention to attack the UK electricity market after it signed a deal with Bglobal, the Aim-traded smart meter and energy data provider.
The contract will see Bglobal supply and install its latest smart electricity meters to Gazprom Marketing & Trading’s UK retail customers.
Companies will increasingly have to measure their carbon footprints and smart meters allow them to accurately measure electricity flow. More than 1m are expected to be installed across the country in the next five years.
“They want to be a player in this market and acquire market share,” said Tony Barnes, chief executive of Bglobal.
“It’s a really interesting time for them to come in as for the first time you’ve got customers interested in metering,” he said.
The Russian state-controlled gas company has been looking to diversify from being one of the world’s largest participants in the gas market into being an all-round energy provider.
It has already taken an 8 per cent share of the UK wholesale gas market and a 1.5 per cent share of the UK retail gas market, with 10,000 corporate customers including high profile names such as Chelsea and Manchester United football clubs and Nationwide, the mortgage lender.
The deal helped lift shares in Lancashire-based Bglobal by 23 per cent, closing up 6¾p at 36½p.
The deal also adds to Bglobal’s expanding list of utility customers, which also includes Npower.
In July it secured a £15m ($25m) facility from Barclays after one of its providers of meter asset finance stopped lending because of the credit crunch.
Bglobal’s meters are already used by Vodafone to measure power at its base station sites in the UK.
This story was featured on The Financial Times website.
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Small businesses call on Ofgem to outlaw rollover contracts
Friday, September 11, 2009
The Forum of Private Business has called on energy regulator Ofgem to ban so-called "roll-over" contracts for business customers.
Ofgem recently signalled that it would not outlaw the contracts, which lock customers in to their energy suppliers for the next period unless they take action to cancel their contracts. The FSB joined the Association of Convenience Stores (ACS) and the Utilities Intermediaries Association (UIA) in condemning that decision, saying it was a u-turn on previous plans to outlaw the contracts. The groups accused Ofgem of bowing to pressure from energy companies.
ACS said its reserach showed that one in five businesses received inadequate notice that their energy contracts were coming to an end. One in ten had received backdated bills and one in four businesses had initially been offered unfavourable renewal terms.
FPB and ACS also voiced concerns that proposals by Ofgem to ease the contracts - such as 30-day notice periods to allow businesses to renegotiate contracts - apply only to micro-businesses (those employing 10 staff or fewer), and not other small business employers.
"Time is running out for Ofgem to take on board how unpopular and damaging rollover contracts can be," said FPB spokesman Phil McCabe. "Members have told us that they are given extremely inadequate notice periods, with some saying they receive no notice at all. Often, they are then forced to pay much higher rates. This is simply unfair."
He added: "These 'evergreen' contracts stifle competition within the energy market because they prevent business owners from shopping around for a better deal.
This story was featured on the Utility Week website.
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Phoenix cuts gas prices by 19%
Friday, September 11, 2009
Phoenix Supply, Northern Ireland's biggest gas retailer, has confirmed a 19.per cent reduction in its tariffs. The price reduction will apply from 1 October.
The company calculated that the average domestic gas bill will fall by £104 annually. This initiative means Phoenix has become the first major UK gas supplier to cut prices twice this year.
David Strahan, general manager of Phoenix Supply, said: "We made a commitment to our customers in January that should the wholesale cost of gas continue to fall we would, once again, reduce prices accordingly. This is a promise we have kept".
The Province's Utility Regulator welcomed the news. Chief executive, Iain Osborne said: "Active regulation is playing its part to help Northern Ireland households and small business weather the recession. We have acted quickly to make sure recent falls in wholesale gas prices are fully passed on to the consumer.
"We made a commitment last year to ensure that cost reductions would be fully and quickly reflected in gas bills paid by Northern Ireland consumers. This announcement delivers on that undertaking".
He added: "Gas customers in the Greater Belfast area are now paying bills that are back to 2006 levels, and that compare favourably to the Republic of Ireland and to the rest of the UK".
This story was featured on the Utility Week website.
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Severn Trent Services expands in Europe with acquisition of Spanish water and wastewater services company
Friday, September 11, 2009
Severn Trent Services has bought P.S. Apliclor S.A., a supplier of water and wastewater solutions based in Barcelona, Spain. The move is part of Severn Trent Services' bid to expand in Europe.
Severn Trent Services has bought P.S. Apliclor S.A., a supplier of water and wastewater solutions based in Barcelona, Spain. The move is part of Severn Trent Services' bid to expand in Europe.
Alex Lloyd, managing director of Severn Trent Services Operations, said: "We have substantially grown our European business in just the past two years, and we are poised for even greater success in the future. Apliclor has worked with Severn Trent successfully on some of the region's largest water and wastewater projects, and our combined experience and resources have enabled us to win several new projects over the past 12 to 18 months."
He continued: "As Severn Trent Services expands its business throughout Europe, our acquisition of P.S. Apliclor S.A. is a key part of our growth strategy. Apliclor is a strong company that has consistently grown its revenues over the past five years. It is highly regarded for its commitment to its customers and the quality of its offerings, which now include additional Severn Trent Services filtration, disinfection and instrumentation products."
Severn Trent Services is part of the Severn Trent group of companies.
This story was featured on the Utility Week website.
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British Gas launches energy management help for businesses
Thursday, September 10, 2009
British Gas has launched an energy management subscription service designed to help businesses identify better ways of using energy and pinpoint measures which should cut electricity and gas bills.
The energy supply giant said the service, known as Energy Locum, could help organisations save 10% on their energy consumption.
The supplier's business arm has highlighted research which indicated that nearly two-thirds of companies did not know who was responsible for energy efficiency or did not have a dedicated energy manager.
The new service offers businesses a dedicated energy manager on a subscription basis: this could be a few days per quarter or several days per month, and provides all of the benefits of an energy manger without the costs and commitment associated with employing one full-time.
Neale Phillips, head of energy services at British Gas Business, said: "The role of energy manager is a highly skilled one, yet many mid-size organisations do not have a dedicated energy manager. Often responsibility for energy and carbon reduction falls to a facilities manager, a procurement officer or someone in the finance department, who don't always have the requisite time or expertise to maximise the benefits of an energy strategy."
This story waa featured on the Utility Week website.
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Call to switch oil for carbon in North Sea
Thursday, September 10, 2009
Britain could earn billions of pounds a year and sustain tens of thousands of jobs by selling space deep under the North Sea for storing carbon dioxide captured from European power station emissions, geologists told the British Science Festival in Guildford on Tuesday.
“Carbon capture and storage could be an industry the size of present-day North Sea oil,” said Mike Stephenson of the British Geological Survey.
“In Britain we’re lucky in being close to one of the largest areas of potential storage for CO2 in Europe.”
The UK could store at least 60bn tonnes – and perhaps as much as 150bn tonnes – of CO2, according to a new study by Edinburgh university.
Most would be in geological strata beneath the Scottish sector of the North Sea. Only Norway has more storage capacity: most European countries have very few suitable geological strata.
“Our group has made a comprehensive first evaluation of offshore UK storage, showing that 100 years of not just UK, but also European CO2, could be stored profitably,” said Stuart Haszeldine, a professor of geology at Edinburgh university.
“The CCS business could be huge,” added Mr Stephenson. “Estimates suggest a value of £2bn-£4bn a year to the UK by 2030, sustaining between 30,000 and 60,000 jobs.”
Although some CO2 would be stored in depleted oil and gas fields, most would go into strata called saline aquifers – sandstones containing microscopic pore spaces filled with salty water. When pumped into the aquifer, the CO2 displaces the water and is absorbed permanently in the sandstone.
“Our research is showing that we can accurately monitor the movement of CO2 almost almost 1,000 metres below the seabed using seismic techniques,” said Mr Stephenson.
The process has been demonstrated in a saline aquifer in the Sleipner field in the Norwegian North Sea, where naturally occurring CO2 has been injected at a rate of 1m tonnes per year for 10 years. “The results are promising, but more research is needed to develop the investor confidence which will finance large-scale industrial CCS,” said Mr Stephenson.
Prof Haszeldine called on the government to accelerate the introduction of CCS at British coal and gas-fired power stations, with five plants fitted by 2015.
“There is still no method for CCS licensing and, critically, no sense of urgency backed by government investment to make a new industry available,” Prof Haszeldine said. “The speed of testing is far too slow to make CCS commercially available by 2020. At present, the UK will be beaten by the US, Australia, Canada and China.”
Mr Stephenson suggested that the UK should follow the example of Texas, where the geology is similar to that under the North Sea. The state is already promoting itself as “the CO2 sink for the US”.
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This story was featured on the Financial Times Website.
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Biwater wins wastewater projects in Northern Ireland
Wednesday, September 09, 2009
Four wastewater treatment works in Northern Ireland are to be upgraded under a new contract from Northern Ireland Water.
The contradt was signed after a competitive tender by NI Water, the province's state-owned water and wastewater company, and Biwater Graham Joint Venture. The four treatment works to be upgraded are at Cargan, Martinstown, Cloughmills and Ballymonie.
Biwater Graham operations manager David Rome said "These awards are further recognition that Northern Ireland Water trust Biwater-Graham to reliably provide quality projects at best value".
This story was featured on the Utility News Website.
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T-Mobile and Orange in UK merger
Tuesday, September 08, 2009
T-Mobile and Orange plan to merge their UK businesses, creating a mobile phone giant with 28.4 million customers.
If completed, a deal between Deutsche Telekom's T-Mobile and Orange owner France Telecom would see a firm with sales of 9.4bn euros (£8.2bn; $13.5bn).
Holding about 37% of the mobile market it would be the UK's largest provider , overtaking Telefonica's O2.
It is the second large corporate action in two days, after Kraft Food's £10.2bn takeover proposal for Cadbury.
Orange and T-Mobile said their deal - due to be signed by November - would "bring substantial benefits to UK customers", and promised expanded network coverage, better network quality and improved customer services.
However it is likely that competition authorities in the UK and EU will probe the deal.
'Efficiencies'
Both brands would remain separate for the first 18 months after the deal is completed while branding is reviewed.
Orange chief executive Tom Alexander would lead the new company, with T-Mobile's UK boss Richard Moat as chief operating officer.
Orange employs 12,500 people in the UK, while T-Mobile has UK workforce of 6,500.
A spokeswoman confirmed there would be "efficiencies" that could be made across both businesses - but said it was too early to give details of any impact on staff.
Integrating the businesses would cost between £600m and £800m, the firms said. This bill would include decommissioning mobile phone masts, cutting back the network of stores and streamlining other operations. Over time, savings should reach about £3.5bn, they added.
Mobile phone analyst Nigel Hawkins told the BBC that it was not unprecedented for a firm to have more than a third of a European country's mobile phone market.
"Over the next few weeks and months there will inevitably be some negotiation with regulators, and we could see some concessions from the operators," he added.
"If the deal goes ahead, then this merged firm, along with O2 and Vodafone will have more than 90% of the UK market and there will be concern that there remains plenty of competition and that this position is not abused."
Avoiding writedowns
Deutsche Telekom said earlier this year that it was considering its options for its UK business - which has struggled to win customers in the highly competitive market -which sees five operators and several smaller players compete.
Observers say that a joint venture would allow the German firm to avoid the write downs it could face if forced to sell T-Mobile UK for less than it hoped.
Meanwhile, for France Telecom, the deal is a way to strengthen its position in the UK market without paying cash or taking on vastly more debt.
T-Mobile is currently the fourth-largest mobile operator in the UK, with a 15% share of the market. O2 has a 27% share, followed by Vodafone (25%) and Orange (22%).
This story was featured on the BBC News Website.
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Late payers put squeeze on E.ON’s profitability
Monday, September 07, 2009
One of Britain’s biggest energy suppliers is facing a mountain of bad debt as its industrial customers put off paying their electricity and gas bills to solve cashflow problems.
E.ON said that its bad debts in the UK were running at the level of “hundreds of millions of pounds”, a burden that the utility argues must be taken into account by Ofgem in its investigation into current retail energy pricing.
“We have not made a profit [in the UK retail market] since 2006. We will not make a profit this year,” an E.ON spokesman said. “We have a problem with industry paying their bills.”
In August RWE, the Germany utility that owns npower, warned that its UK retail business was affected by payment problems. “Social obligation costs, as well as bad debt, reduced our earnings significantly,” the company said, indicating that npower’s results would be lower this year and affected by public policy. “[UK] governmental programmes in 2009 are expected to cost up to €100 million [£87 million] more than last year,” RWE said.
The energy companies were already heading for a conflict with the Government and Ofgem, the energy regulator, over energy prices. In response to public outcry over the failure by utilities to pass on quickly the benefit of falling wholesale gas prices, Ofgem has written to the chief executives of the six leading energy suppliers asking them to explain.
The day-ahead gas price, a benchmark for short-term demand, has fallen below 20 pence a therm, two thirds below the level of a year ago, and it is expected to fall farther because of weak demand from industry and an anticipated glut of liquefied natural gas (LNG) imported from the Middle East and North Africa.
Even at these low price levels, gas companies are expected to dump cargoes of LNG in Britain. New supplies of LNG from Qatar, Egypt and Nigeria have coincided with a gas glut in the US, where demand for imported fuel has evaporated. The US gas price has fallen below UK levels and is at a seven-year low, forcing LNG suppliers to divert cargoes of LNG destined for the US to terminals in west Wales and the Thames Estuary.
The wholesale price collapse is rewarding some utilities with record profit margins. They are reluctant to pass on any benefit to consumers, arguing that they are making up for past losses and building up reserves to cope with bad debts and the burden of governmentimposed costs relating to climate change.
“We have had two years in which we have invested more in the UK than we have taken out in profit. Over the long term that is unsustainable,” E.ON said. “We will be spending £1 billion per year for the foreseeable future.”
In their response to Ofgem’s pricing inquiry, the utilities will argue that the current wholesale price of fuel is not the cost of the fuel supplied to consumers at present as utilities have a portfolio of contracts to purchase gas as much as a year in advance or long-term supply agreements at prices indexed to crude oil.
“It’s quite obvious the energy we are using is the energy we bought last year,” a spokesman for a leading utility said.
However, Ofgem is under pressure to show that it is acting tough over energy prices. The regulator faces losing some of its influence under government plans to give the Department of Energy and Climate Change more control over energy infrastructure and policy.
This story was featured on The Times Website.
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Customer service set to be a bottom line issue for the water sector
Sunday, September 06, 2009
Water companies will have to improve the quality of their customer interactions from next April, under proposals put forward by Ofwat changing the way water company performance is assessed.
The Service Incentive Mechanism (Sim) is set to replace the current Overall Performance Assessment (OPA) in April. Over the past decade, the OPA has assessed companies on a number of customer service indicators, such as low water pressure and response times. The Sim will assess companies against customer expectation and experience through both a quantitative and a qualitative measure.
The quantitative measure will assess the negative contacts a company caused. This will be weighted at 1 for a phone call from a customer with a problem through to 1,000 for a Consumer Council for Water (CCWater) investigation into a complaint.
The qualitative measure will be a survey of a random selection of customers who have had direct contact with their water company. They will rate these interactions.
Companies will be given a numerical score from which the best performers will be rewarded (by up to +0.5 per cent of 2015-20 price limits) and poor performers punished (by up to -1 per cent).
CCWater chief executive Tony Smith said the survey should also include customers who had not made direct contact with the company. He said too that the financial adjustments were not large enough: "If it was to mimic a competitive environment, it would have a bigger impact."
Ofwat said: "This will help further drive improvements in the quality of service companies deliver to consumers."
This story was featured on The Utility Week Website.
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Security of supply to be debated in public
Saturday, September 05, 2009
Water companies in England have received ministerial decisions on statutory water resource management plans. Some will be subject to a public hearing or inquiry.
Each hearing will need to address whether the company has identified the right options to ensure secure water supplies for their customers over the next 25 years.
This is a very important question, but here is another, just as important, that impacts all company resource plans: how can ministers ensure that plans they have signed off will be implemented if Ofwat does not allow companies to raise the finance needed?
An apparent lack of consistency between Ofwat's draft determinations and ministerial decisions on water resource managment plans makes this a matter of concern for everyone with an interest in the water sector.
This story was featured on the Water UK website.
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Europe begins phasing out old-style light bulbs
Thursday, September 03, 2009
Shops across Europe began phasing out traditional energy-guzzling light bulbs Tuesday, despite health and cost concerns, with the old-style frosted and 100-watt bulbs the first to go
While vendors will be allowed to sell off their remaining stocks, as of Tuesday there will be no new orders of non-transparent frosted bulbs -- deemed particularly inefficient -- or the standard clear 100-watt bulbs.
Tuesday's move is part of a three-year scheme to rid the whole of the European Union of the traditional incandescent bulbs first put on the market by Thomas Edison in 1879.
The less powerful clear bulbs will be progressively banned until all traditional lights disappear from shops in 2012.
Some consumers have been stockpiling the old-style versions, aware that the more energy-efficient long-life fluorescent or halogen lamps cost more to buy. Others are concerned about possible health consequences.
While the European Consumers' Association the BEUC has welcomed the phasing out of incandescent light bulbs, it has expressed concern about the high mercury content of their replacements.
The EU plan also "falls short of the needs of some consumers who need to use the old-style light bulbs for health-related reasons such as light sensitivity," the BEUC added.
The Commission argues that the new bulbs will cut mercury emissions from power stations and has published guidelines for dealing with mercury spills from broken bulbs: avoid skin contact and do not use a vacuum cleaner to clear up.
Such assurances did nothing to lift the opposition of the likes of Geoffrey Bloom, European member of parliament for the EU-sceptic UK Independence Party (UKIP).
"Time and time again we watch with despair as the EU churns out legislation with unintended consequences -- and here we go again," he bemoaned.
"We are being bullied into this in the name of climate change but what about the mercury contained in the new energy saving bulbs. I have no doubt that the issue of their disposal has not been given proper consideration," he added.
The phase out of the old light bulbs is all part of the EU's bigger plan to cut greenhouse gas emissions 20 percent by 2020.
The new bulbs, such as compact fluorescent lights (CFL) can save up to 80 percent of the energy used by the worst old-style lights in homes.
They are also described as lasting several times longer than the bulbs they will replace.
So even though the new bulbs cost more, the European Commission stresses that consumers will save money: between 25 to 50 euros a year, depending on the size of the household, the EU executive claims.
The European Commission has not ruled out the possibility of the old 100-watt bulbs becoming something of a collector's item and changing hands at inflated prices.
This story was featured on the BT Yahoo News website.
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US utilities hit as consumers go green
Wednesday, September 02, 2009
After an energy audit on her home this summer, Meredith Keelan spent $12,000 to install six solar panels and deep insulation in her attic.
She fitted a solar-powered attic fan and bought a new fuse box. The solar fan means her mechanical ones rarely blow. Ms Keelan uses three times less power during the day, when the solar panels power her home, than at night, when she relies on the grid. Once she pays off these energy improvements, Ms Keelan will invest in six more panels, at $1,700 each (€1,190, £1,045).
The high-school teacher believes she will recover her investment, on which she received a 30 per cent tax credit, in six years, through savings on her energy bills.
“I am ecstatic,” she said. But power producers are not.
A growing number of businesses and residential customers are doing what Ms Keelan has done to reduce power use, putting extra strains on utilities already grappling with a drop in demand from industrial users as a result of the economic downturn.
Wholesale power demand was down 15.3 per cent in the second quarter compared to last year, according to data compiled by Credit Suisse Securities. Total retail demand was down 5.4 per cent, with industrial demand plunging 14.7 per cent, commercial demand falling 3.5 per cent and residential demand dropping 1.7 per cent.
The steep drop in US power demand in the first half of this year has led Credit Suisse to forecast the steepest annual decline since the second world war – a 2.8 per cent drop. The economic downturn and the weather are responsible for a large part of that. But even when markets recover, analysts say, demand will stay lower as consumers and regulators seek ways to reduce consumption.
“This has greatly challenged conventional wisdom that load growth was a given,” said George Given, head of global power research at Wood Mackenzie, the consultancy. “It’s unprecedented.”
US utilities have been able to plan for 1-2 per cent demand growth annually for years, he said. Yet, apart from the decline in residential use, a large amount of the drop has come from industrial customers: “This caught utilities off-guard.”
Mr Given believes that conservation efforts, which are easiest to implement, are reducing power demand, with people turning off giant plasma televisions when not watching and better managing overall energy use.
Many are ordering energy audits and following advice for lasting changes, such as double-glazed windows, improving insulation and buying energy-efficient heating and cooling units, as well as appliances.
“There is a mindset change in consumers,” said John Berger, chief executive of Standard Renewable Energy, which sells energy audits and solar energy. Those who follow the advice in energy audits typically reduce power demand 20-30 per cent. “The demand for that service is going up exponentially,” he said.
The company’s energy efficiency and solar businesses have both grown about 20 per cent per month in the past six months.
The impact on utilities’ bottom lines has led to talk about forcing consumers to pay a flat fee for electricity, so utilities will be profitable even if power demand continues to drop.
“It’s desperate behaviour,” Mr Berger said.
“Change and moving ahead is what this country is all about.”
This story was featured on the Financial Times website.
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US natural gas store may near capacity
Tuesday, September 01, 2009
The US Department of Energy said on Monday that peak natural gas storage capacity rose by a modest 100bn cubic feet in the year to April, suggesting gas stockpiles will be close to tapping out capacity this fall.
In a widely anticipated update, the department’s Energy Information Administration said peak capacity in the lower 48 US states is 3,889bn cubic feet, a 2.6 per cent increase from 2008. Forecasters in a separate wing of the agency predict gas socked away underground will rise to a record 3,800bn cubic feet by October, easily surpassing the record of two years ago.
Traditionally, natural gas companies inject their production underground - in salt caverns, depleted oil wells and aquifers - through the summer, when demand is weak, to meet higher consumption during winter months.
If producers run out of places to put the extra fuel, cash prices could collapse. A 2006 gas glut in the UK briefly pushed wholesale prices there below zero. Gas for October delivery at Henry Hub, a Louisiana pipeline nexus, settled at $2.977 per million British thermal units on the New York Mercantile Exchange, down 65 per cent from a year ago.
“During years like 2009, when storage builds have been historically large, the total amount of gas that operators can store becomes particularly important,” the EIA said. “As storage fields near their maximum capacity, constraints on storage may cause downward pressure on prices paid for current supplies of gas until the winter demand rebalances supply and demand.”
Working gas design capacity, which is based on the physical characteristics, equipment and operating procedures at underground reservoirs, rose 177bn cubic feet to 4,313bn cubic feet in the same period, but this may overstate how much capacity is actually available, EIA said.
Edward Kott, an analyst at LCM Commodities in New York, called the EIA’s peak capacity estimate “incredibly conservative,” as it assumes every gas facility has previously reached maximum capacity and reported it on the monthly forms that provided the raw data for the new storage estimates. He said the agency is probably underestimating capacity “by at least 200bn cubic feet.”
This story was featured on the Financial Times Website.
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