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Issue link: https://read.utilityweek.co.uk/i/678345
UTILITY WEEK | 13TH - 19TH MAY 2016 | 3 Leader Jane Gray This week 4 | Seven days 6 | Interview Alan Whitehead MP, shadow energy minister 11 Policy & Regulation 11 | News Labour scathing over early capacity auction 12 | Market view Why all administrative codes should be competitive 13 | Analysis A tale of three regulators 14 | Market view It is essential that utilities are on their guard against corruption 15 Finance & Investment 15 | News Ex-SSE chief boosts Powervault funding 16 Operations & Assets 16 | High viz Norvento's new turbine 17 | Expert view Nick Shipton, Kirona 18 | Market view Is totex working? 20 | Market view Safety first when power plants shut down for maintenance 23 | Analysis Ireland's efforts to restructure its water sector 24 Customers 24 | News Retail margin drove UU-Severn Trent joint venture 25 | Market view Customised messaging is essential for customer retention 27 | Market view Why direct debit continues to appeal to consumers 28 | Market view Who switches, and why? 30 Community 31 | Disconnector Competition is about more than margin A marriage of necessity – that is how the joint venture between United Utilities and Severn Trent was defined when the former's chief executive told Utility Week that the union had been driven by the low retail margin set for the soon-to-be-competitive non- domestic water market (p24). There's been a good deal of mithering in the water industry about the level at which the retail margin has been set – 2.5 per cent. Many say it is too low to tempt market participants into vigorous competi- tion on price, something Ofwat chief executive Cathryn Ross has repeatedly denied. She even recently set out her hope that compe- tition will become lively enough to allow the withdrawal of price regulation in the non-domestic sector. The point, Ross asserts, is that competition is not about margin alone, but also about the abil- ity to drive down the cost to serve and to think creatively about the methodology used for creating competitive advantage. To some extent it looks as though Ross is right here. Although Sue Amies-King – the chief executive of the joint venture – cited the need for economies of scale in the face of a small margin as the "rationale" for creating Water Plus, she also directly associated the move with an ambition to innovate and become a "winner in the market". It seems that marriages of necessity may therefore also be the mother of invention for incumbent players and it is expected that further joint ventures will come into being before the market opens – perhaps defining the early days of competition more as a time of consolidation than of proliferation in market participants. Such a rationalisation may be no bad thing as business customers begin to explore their options and develop ideas about what they could or should expect from their water retailers. While many still hope that Ofwat will move the retail margin upwards in due course – following Scotland's example – Ross has been clear that she expects companies to respond to competition as a driver for creative differentiation. Her eyes are now set on other challenges – such as defining "what a well-functioning market looks like" and how should it be monitored – topics she will discuss at Utility Week Live. Jane Gray, Acting Editor jane.gray@fav-house.com Note: Jane Gray is acting editor of Utility Week for the period May-December 2016 while Ellen Bennett is on maternity leave. GAS 13 | Analysis A tale of three regulators 15 | Stock watch Centrica 27 | Market view Why direct debit continues to appeal WATER 14 | Market view It is essential that utilities are on their guard against corruption 18 | Market view Is totex working? 23 | Analysis Ireland's efforts to restructure its water sector 24 | News Retail margin drove UU- Severn Trent JV ELECTRICITY 11 | News Labour scathing over early capacity auction 16 | High viz Norvento's new turbine 20 | Market view Safety first when power plants shut down for maintenance ENERGY 6 | Interview Alan Whitehead MP, shadow energy minister 12 | Market view Why all administrative codes should be competitive 25 | Market view Customised messaging 28 | Market view Who switches, and why? Visit the Downloads section of the website Wipro: Digitisation and the Internet of Things http://bit.ly/1LbI3Jt Achilles: How can utility suppliers get noticed by big industry buyers http://bit.ly/1KaByWW Aeris: Water Meters and the Internet of Things. http://bit.ly/1rEqcT0