Professional Documents
Culture Documents
ORG
UTILITY BUSINESS
WINTER 2011
THE QUARTERLY PUBLICATION FROM SBGI UTILITY NETWORKS
Foreword by David Willetts, MP, Department for Business, Innovation & Skills
In this issue:
New SBGI Chief Executive Interview with Mike Foster Utility Metering Smart Rollout An Olympic Challenge Leading Voice Utility Business talks to John Spellman National Grid Winter Outlook
SBGI Your NewUtility Business Winter 2011 Business Magazine is here Look Utility
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Our Leading Voice interview features Fulcrum CEO John Spellman. The business has been through significant restructuring to focus on its core connections service and an improved customer experience. I really hope you enjoy this issue. If you have any news to share regarding developments in your own company for the next issue, please do drop me a line.
=================================== Chairmen Utility Networks Board: Steve Murray (National Grid Distribution) Dist/Trans Equipment Group: Richard Stone (AVK UK Ltd) Network Engineering Group: Ian Foster (Fulcrum) Metering Services Group: Vic Tuffen (Tuffentech Ltd) Metering Technology Group: Jeff Cooper (Elster Metering) Gas Storage Operators Group: Roddy Monroe (Centrica Storage) Data & Communications Management Group: Mike Buss (Sensus Conservation Solutions) =================================== Editor/Enquries Caroline Taylor caroline@sbgi.org.uk 01926 513762 ISSN Number 1359-9836 SBGI Utility Networks Camden House, Warwick Road, Kenilworth, Warwickshire CV8 1TH Tel: 01926 513765 Fax: 01926 857474 Visit the blog at www.utility-business.org
In this issue
Features
Meet Mike Foster
Interview with the new SBGI Chief Executive
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Utility Metering
Smart Rollout An Olympic Challenge
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Regulars
Utility Networks News Industry News Regulatory Update Member Directory Viewpoint 4 7 8 21 22
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UTILITY BUSINESS
THE QUARTERLY PUBLICATION FROM SBGI UTILITY NETWORKS
Welcome
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Member Survey
We are pleased to report positive results from our 2011 membership survey, which ran in the Autumn. We would like to thank all members who contributed. This feedback plays a valuable part in helping us maintain a high level of service and in developing our focus for 2012 and beyond.
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Mike Foster took up his role as new SBGI Chief Executive in October. Utility Business caught up with him five weeks into the post to find out how hes settling in.
Its been really hectic since I started, there is such a lot to learn. Not just about the internal structure and operation, staff and industry colleagues, but also a full understanding of whats driving our members wider business agendas, as well as specific campaigns SBGI is working on to support them. I am extremely fortunate to be taking on an organisation that the previous Chief Exec left in a very healthy position. My current efforts are focused on looking at where I can add value. And, as a former Head of Communications and MP, Mike is already doing just this. Hes headed a campaign for the heating industry supporting their call for the reinstatement of the boiler scrappage scheme (asking Chancellor George Osborne to get this back on the political agenda) and backed the recent call by the energy select committee for the urgent need for more Gas Storage. Mikes early career was with Jaguar Cars at Coventry and Castle Bromwich. It was here that he gained his accountancy qualifications and worked as a management accountant. Following this he took up a further education teaching post in Accountancy, Finance and Economics, which he carried out for six years. Then, in 1997 Mike was elected MP for Worcester a long term ambition and interest. I consider myself incredibly lucky. A lot of people aspire to be a Member of Parliament but only a few
get the chance. I gained some fantastic experience over the thirteen year period in office working on select committees, in the whips office and in Northern Ireland. In 2007 a telephone call one Saturday afternoon from the Prime Minister (interrupting viewing of an important football match!) saw Mike start the post of Minister for International Development two days later. It was this post that has probably had the most lasting impact on Mike. It was a fantastic job opportunity but I visited some of the worlds most troubled spots including Nepal, Gaza, Sri Lanka, Yemen, as well as places hit by awful natural disasters such as Haiti (where, incidentally, he met Bill Clinton visiting the area at the same time!). You learn such a lot about the world being involved in this sort of work and also about yourself. It puts things in perspective. You never forget your first refugee camp the sights, the sounds, the things the TV cannot relay it stays with you forever. UK Government really does do some good work in this area. Having left parliament in 2010 Mike headed up communications for the charity WaterAid for a year, based in London. Working for SBGI gives me the chance to be back in my home area of the Midlands. After being based in London and only home at weekends for fourteen years, it was an attractive proposition. Although not having worked directly in the energy, heating
or utilities industry, I was familiar with SBGIs work having come across it doing constituency work, so knew its reputation. Going forward, I want SBGI to be much more external facing and for members to see much more of what it does. Theres an awful lot of good work going on, a strong team of people and SBGI is incredibly well respected, both in industry and Whitehall. This puts SBGI in a strong position to affect real industry change and I want members to reap the benefit. Where I can hopefully add the most value is through my parliamentary experience - seeing how Whitehall works, understanding the processes, having a feel for hot topics and possessing the right language. I feel I can really make a difference through adding my broad range of experiences and political eye to the strengths this organisation already has. How this might impact on the strategic direction of SBGI is currently being discussed by Mike, the Divisional Directors and the Management Board. ICOM became SBGIs third division on 1 November and is an excellent example of how organisations can collaborate and take advantage of the economies of shared service delivery etc. It is a very interesting model. Looking forward, although we are steeped in the gas industry, and this is a distinguished part of our history, we must ultimately have a broader outlook in the energy and utilities sector which might well be reflected in how we identify ourselves.
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1) Kate Smith, Ofgem 2) Jason Brogden, Engage Consulting 3) Steve Cunningham, Landis+Gyr 4) Zoe McLeod, Consumer Focus 5) Geoff Hatherick, DECC 6) Chris Murray, Xoserve 7) Julian Liddy Macquarie Bank 8) Jeff Cooper, Elster Metering 9) David Johnson, Senior Regulatory Manager Europe, Centrica 10) Paul Brodrick, Cable&Wireless Worldwide 11) Jeff Studholme, G4S Utility Services (UK) 12) Chris Rowell, Elexon 13) David Green, Arqiva 14) Stuart Miller, ByBox 15) Martin Deehan, Enterprise 16) Charlotte Wedd, Commercial Director, British Gas Smart Metering
The stimulating programme provided an update on key issues across the Utility Metering supply chain, with a focus on smart metering and the progress of Governments rollout programme.
Content included review of smart trials and early deployment experiences, assessment of consumer issues, thoughts on the DCC, a look at wider industry issues and stakeholders views across supply, meter manufacturing and installation.
Much more work is required on consumer engagement, which has been slow coming. A change in emphasis is required as much of the focus of the programme so far has been on technical issues. It must be more consumer led. Most speakers echoed this theme. The ERA is leading work on the smart metering installation code of practice. This code will help ensure companies do not abuse the opportunity to sell to consumers when they are installing smart meters, and will manage consumer expectations of the installation process.
Industry Issues
The first significant milestone has been reached in the smart metering programme with publication of the Industry Draft Technical Specification (which now has to gain approval from the EU) but there is still an enormous amount of work to do. There are four industry consultations (concluding in November) which will shape the next steps in the programme. These will help define the DCC (perhaps the single biggest challenge), HAN, WAN, interoperability testing, data security and privacy issues. To rollout 50 million smart meters and install in home displays the metering industry will need to grow its workforce threefold, creating significant deployment of resources and skills challenges. The National Skills Academy for Power (Metering Network) will facilitate Smart Metering skills development with a training framework in place by Sept 2011. Smart Metering in Europe is driven largely by the Third package. The gas and electricity directives of the third package require member states to equip at least 80% of customers with smart (electricity) meters by 2020. Identical technological solutions are not required across Europe, however, Mandate M/441 will ensure European interoperability standards of utility meters. The UK is unique in its ambition to roll-out both gas and electricity meters.
Smart Trials
Ofgem shared headline figures from its now completed Energy Demand Research project (EDRP) which involved over 60,000 households. Their findings show energy savings of between 3% and 5% in households with smart meters. How advice is delivered to households will be an extremely significant part of the overall success of smart meter roll-out. British Gas Smart Metering is moving to market early and already has over 330,000 smart meters installed. Echoing findings from the EDRP, they have identified softer skills such as behaviour and customer interaction, to be just as important as technical aptitude in their meter installers for successful uptake.
Consumer Issues
Consumer Focus is campaigning hard on behalf of energy consumers. They support smart metering and the Governments objectives but are keenly aware of the detrimental effects if industry does not get it right. Cost of the programme to the consumer is their biggest concern along with data access, privacy and security issues.
Exhibition
Further to the seminar programme the day provided a topical supply chain exhibition showcasing the seven event sponsors along with exhibitors Encore Energy, Origin, Tuffentech and Powerplus Communications.
Industry News
Less than One Year to Green Deal
With the Energy Act becoming law in October, the legal framework for the Green Deal is now finalised and the programme is expected to be launched in Autumn 2012. Green Deal will help improve the energy efficiency of the nations homes and businesses, which are responsible for almost 50% of the UKs carbon emissions.
UTILITY METERING: SMART ROLL-OUT AN OLYMPIC CHALLENGE //INDUSTRY NEWS INDUSTRY NEWS
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Regulatory Update
Annual Energy Statement
Governments second Annual Energy Statement was delivered to Parliament in November, describing progress and policies underway. A crucial part of the Department for Energy and Climate Changes strategy is to reduce the amount of energy used in homes. The statement had a particular focus on the impact of policies on energy prices and bills. Government also announced 200m new and additional funding to support Green Deal, as well as launching a consultation on the programme. The Green Deal framework will be launched from October 2012.
Michael Pollitt is a University Reader in Business Economics at the Judge Business School, University of Cambridge and Director of Studies in Economics and Management at Sidney Sussex College, Cambridge. Between 2007 and 2011 Michael was external Economic Advisor to Ofgem, advising on Project Discovery, the Fifth Distribution Price Review, the LENS project, RPI-X@20 and the smart meter rollout, among other projects. He is currently a member of Ofwats Future Challenges expert panel and an advisor to the Consumers Association. He is also an Assistant Director of the ESRC Electricity Policy Research Group.
An independant view Stuart Godfrey, Radius Systems, poses the question whether from a supply chain perspective this new approach is self-defeating or not, and perhaps a better solution is in more commercial as well as technical innovation.
I would suggest having discussed with experienced colleagues in the industry that this measure of that population is far too simplistic from many viewpoints. From a risk viewpoint, whilst this population of mains (>8) may create fewer incidents, any such incident would typically have the potential to be much more severe than those created by smaller mains. From my own perspective, a simple kilometre metric is totally unrepresentative of the impact on the supply chain. That 15 18% population of iron mains represents 33% of the output of the plastic pipe sector and I suspect this skew is representative of all the supply chain. Such a shift would have more dramatic implications for the size of many businesses and the resultant impact on the price of the remaining products the industry would still expect to procure. This effect I am sure would be reflected in all parts of the supply chain, notably in the contracting community. I suspect such an impact has not been factored into the forecasts for RIIO based business plans. More broadly, when our wider economy is at best flat lining and it is government policy to rebalance the economy in favour of high value British manufacturing, it begs the question as to whether it makes sense at this point in time, to drastically reduce the level and spend of a safety based infrastructure replacement programme with the inevitable impact on primarily home based manufacturing and contracting capacity and capability. To cut back a privately funded (not publicly funded) source of shovel ready employment and its flow through to the economy in general seems perverse. There is indeed an argument for its acceleration. There is still time to think about the wider implications of the safety regime and the cost regime in this industry from 2013 and beyond. We have, as a nation, developed this industry to be world leading, and its skills are exportable, more so as other nations infrastructure ages, Hong Kong is a key replacement market, Queensland a new resources market, Egypt and Libya of key potential.
It would appear to me that the proposed amendments to the Iron Mains Replacement Programme in the UK gas industry are predicated on a rather short term insular monetary view of the industry rather than a view of the greater economic and environmental impact.
Indeed there are those whose view is that a continued replacement approach relative to a repair and monitor regime would actually save money when adding in the benefit of reduced levels of shrinkage or methane leakage. Furthermore there is a high risk that the law of unintended consequences will come into play, higher unemployment, lower industry capability and less funding for future innovation, not more. Having listened carefully to many presentations at the recent SBGI/ IGEM Gas 2011 conference which referred to this issue in the context of the RIIO debate I felt that the industry is in danger of becoming a victim of its own success and at the same time opening itself up to worst kind of criticism, that it deliberately decided to stop removing known risk to life on grounds of cost. The success of the current version of the gas mains replacement programme the so called 30/30 programme has meant that lives lost due to gas escape events associated with ageing iron infrastructure have fallen. Even if the costs of programme delivery were constant, it should come as no surprise therefore that the cost per life lost (or the cost of lives saved) has shown a dramatic increase this an expected and positive KPI of this programmes success. Yet it is this metric (the cost of life saved (~200m) not the cost of life lost) which is being used to justify slowdown. A Metric which ignores the cost of injuries, however severe, and the loss to the economy of those injured or killed. It is a brave man who puts a value on human life and decides that a specific value is too much to ask. That same cost per life lost can rapidly and dramatically reverse its direction of travel should we have another rare but catastrophic incident. Only then, it would appear, would the enquiries start into such a decision, when, I would suggest, it is too late. The proposed change in the replacement programme would see all mains over 8 diameter and below an agreed risk threshold (Tier 2 only) be subject to much more scrutiny and economic justification before their de-risking, in many ways a reversion to a previously discarded policy. The population of this group of mains is around 15 18% of the at risk population of remaining iron infrastructure if measured simply in kilometres.
Has Ofgem really considered the implications for the whole supply chain on the countless number of SMEs who will be impacted by such a change? If the current proposal were adopted and its likelihood, I would suggest, has already damaged investor confidence in future investment, then a resized industry may not be able to react to a subsequent rethink triggered by future unfortunate events. Thinking of the wider economic impact on our country would indeed be innovation in the Supply Chain.
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UTILITY BUSINESS
FEATURE
INNOVATION FEATURE
Foreword
> David Willetts meets apprentices at the Jet Fusion Experiment at Culham Centre for Fusion Energy.
Innovation is the key to sustainable growth and higher living standards in todays global economy. The utility sector faces a unique set of challenges and opportunities including a low carbon future, the move towards integrated infrastructure, and compliance with environmental regulations. The sector has strategic importance to the UK. It provides us with essential services light, heat, water. It plays an important part in the UK economy, contributing around 36billion of UK GVA across water, gas and electricity in 2009 and employing over 150,000 people. Innovation will be critical for the sector to grow and meet its challenges. It is encouraging to see the range of initiatives to increase innovation that are showcased in this edition of Utility Business. We recognise that Government also has a stake in encouraging innovation to meet social challenges and deliver more efficient services. That is why we launched our Innovation and Research Strategy in December, setting out how we will support innovation and research in the UK and where our investment can add value. We considered how innovation can be better supported across all sectors of the economy and in particular areas with growth potential, including utilities.
That is why we committed ourselves to work with a range of businesses, academia and other experts to address the innovation barriers that the utilities sector faces and enable greater levels of innovation and growth across the sector. We will focus on areas including improving skill levels in the industry and increasing exports. We will also help utilities businesses to access Government support including from the Technology Strategy Board. We look forward to working with the sector to address the challenges you face. David Willetts, Minister for Universities and Science Department for Business, Innovation & Skills
Danish engineering firm Bystrup beat 250 rivals to win the Royal Institute of British Architects Pylon Design Competition. It set the challenge to replace the familiar triangle pylon design - in use since the 1920s. The 20-tonne T-pylon would stand at just 32m (105ft) 28 metres shorter that current pylons and could be coloured to blend in with the countryside, while a stainless steel version for coastal areas would offer protection against corrosion from airborne salt.
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UTILITY BUSINESS
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UTILITY BUSINESS
> The new Pan and Tilt model with 360 degree circumferential vision
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UTILITY BUSINESS
Third party damage to apparatus is a significant source of disruption and danger to energy sector workers and members of the public, and can result in utility companies incurring serious losses, both financially and reputationally. Advanced warning of potential threats can be a critical trigger for taking targeted action to prevent damage, such as site supervision or offering focussed guidance to third parties.
National Grid currently receives hundreds of enquiries every week concerning activities that may affect their assets. These enquiries are assessed and dealt with by a dedicated team, who evaluate the enquiries against the gas distribution network, high pressure gas transmission system and the electricity transmission network. The high volume of enquiries received, and the requirement to respond in a consistent, comprehensive manner across disparate asset types, makes it difficult to implement a manual process to deal with enquiries in a timely and accurate manner. GL Noble Denton, in collaboration with National Grid, has implemented the EAGLES system (Electricity And Gas Location Enquiry System) to allow an appropriate response to be automatically generated and provided to third parties in a timely manner, while flagging activities judged to pose a potential high risk to apparatus for manual assessment. EAGLES is a web-based system that allows third parties to specify the details of proposed works via an intuitive user interface. The information provided is then passed to an expert system which incorporates National Grids damage prevention rules and policies. These rules dictate which activities are determined as likely to pose a risk to apparatus, based on the type of activity and its proximity to that apparatus. Once the expert system assessment has been applied, the third party enquirer receives an email response containing further instructions, guidance relevant to the activities specified and scaled asset location maps covering the area affected by the proposed works.
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UTILITY BUSINESS
For more information on any of these systems contact details are below:
Keyhole Technology for Gas Mains Sophie Stanhope, Synthotech 01423 816071 sophie.stanhope@synthotech.co.uk Asset integrity of Electrofusion Pipe Jointing Nick Mark, ControlPoint 07918 720666 nmark@fusiongroup.com. Electricity And Gas Location Enquiry System (EAGLES) Neil Slater, GL Noble Denton 01509 282324 neil.slater@gl-group.com
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Software for Utilities Maintenance Workflow Management Rachael Bean - For further information and to book a free demonstration, 08450 554455 Supply Chain Partnership: Collaboration Breeds Innovation James Merrylees, Balfour Beatty Utility Solutions, 0114 232 9562 james.merrylees@bbusl.com
UTILITY BUSINESS
> Kobus
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TACKLING // WATER DRAGONS 2011 INNOVATION IN THE SUPPLY CHAIN - CASE STUDIESDISRUPTION ON OUR ROADS
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UTILITY BUSINESS
His research has also identified those drivers that lie behind innovation in the utilities industry, including cost, safety, process, gaining competitive advantage as well as regulatory requirements.
When posed with the question can someone be taught how to innovate or is it innate in the individual, Gerard replied I feel it is a bit of both, in some ways it is like the entrepreneur, some people are natural entrepreneurs that can spot gaps in the market, however the skills required to be an entrepreneur, such as how to start up a company, can be taught in the same way as individual can be taught the skills to develop an innovation. Asked to site an innovative champion from any sphere Gerard gave Google as a good example. Their innovative practices and cultural perspective is excellent, he said, they are open to change, open to innovation, they are proactive and flexible, but then the market they are operating in dictates that they have to be. He concluded by reminding me that there is a very fine balance between being innovative and being radical and this is a balance companies need to be aware of. Although the utilities industry is a low risk sector for investors, innovation might well be seen as a risk.
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Gas 2011
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IGEM and the Utility Networks Division of SBGI jointly organised this years annual one day Gas 2011 Seminar. Around 90 delegates gathered at the Sir Denis Rooke Building, Holywell Park, Loughborough and gained insight into what is currently shaping the UK Natural Gas Industry at this highly anticipated industry update. An extremely positive message came out of the event, not only that of the significant role gas and will continue to play in the UKs future energy mix but also the diverse and exciting work going on in the sector. The breadth of topics covered at the event and depth of knowledge illustrated served to highlight just what a dynamic industry this is.
used as a lever to improve, though may require cultural change. The environmental challenge and carbon targets are demanding greater innovation and necessitating a shift in mindset in the whole industry. In gas networks we are seeing innovations such as biomethane injection into the gas grid, hydrogen blending, microgeneration, fuels cells and improved methods of working practice. By 2020, 26 million British homes will be smart enabled, transforming the energy suppliers relationship with the customer and the customers relationship with energy. Consumers will benefit in lots of ways from the smart world but these improvements will only be delivered if the legal, regulatory and standards framework supports innovation and competition. Heating and hot water is responsible for 27% of total UK carbon emissions and is increasingly prominent in policies and legislation to reduce emissions and combat climate change. Key policy include Feed in Tariffs - a scheme that pays people for creating their own green electricity, Renewable Heat Incentive, a similar measure for heat, and Green Deal, due to launch in 2012 which will encourage people to take measures to make their homes more energy efficient by providing finance upfront by way of a loan.
> Tony Hetherington, HSE > Mark Horsley, Northern Gas Networks
Summary Points
Gas will continue to be a crucial part of the energy mix both in energy and production of energy. In fact as far out as 2050 gas will still represent around 72% of the energy mix, even with significant renewable plans. Shale gas could be a game changer. Global recoverable resources have huge implications for world gas markets and could change the way gas is viewed on the planet, though the environmental lobby still pose a number of concerns about its development. Much work has already been done on Carbon Capture and Storage and much has been learnt but it is an expensive business therefore funding will be critical to its success. The limited framework in place is not helping investment questions. In gas distribution the new regulatory framework is imposing new requirements on the network companies and requiring them to think very differently about their businesses. This should be embraced and
Exhibition
The day provided a topical supply chain exhibition showcasing the event sponsors along with exhibitors Radius, Lowri Beck, GMI, Denholm Pipecare, Steve Vick, Expedient, UKSTT, Sperryn & WASK, Corrosion Services, Expedient, Develop and Sick.
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Kindly sponsored by GL Noble Denton and Balfour Beatty with special thanks to Phil Brown, Stuart Godfrey and David Morgan, Chairmen throughout the day.
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Do you have a last minute technical training requirement? Call 080001 33 00 or visit 1
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LEADING VOICE
Marwyn Capital Investments acquired the gas connections business and independent gas transporter, Fulcrum, in July 2010 from National Grid.
Now publically owned, the business has been through significant restructuring - including a new corporate identity and move to new premises - to focus the business on its core connections service and delivery of an improved customer experience. Utility Business caught up with Chief Executive Officer, John Spellman, to find out a little more about the new Fulcrum. A chartered accountant by profession, John Spellman has spent his working life in the upstream and downstream oil and gas and utilities industries. He has had an extremely successful career which is clearly more than just a job - he exudes a tangible passion for the sector. Having spent 20 years living in Canada buying up oil and gas companies, he was then head hunted back to the UK. A self declared number cruncher John also possesses a keen organisational eye, demonstrated by a history of taking small companies and successfully growing them. These experiences and skills see him well placed for his current challenge as Chief Executive Officer of Fulcrum. The acquisition of Fulcrum came about following a chance conversation over lunch with an industry colleague, Mark Watts of Marwyn Capital. I recognised that Fulcrum was a jewel, explained John,but simply because it existed within National Grid. Within this larger entity, it did not get the same level of management attention and main board consideration that it would existing on its own. In July 2010 Marwyn Capital Limited acquired Fulcrum in a reverse takeover from National Grid plc, and a new management team was put in place. The past 12 months has been very interesting good and bad! shared John. There were no real surprises. We knew what to expect when we took the business on. Fulcrum has never made money, never been profitable but we will not fund continued losses. Our objective is to change the way in which Fulcrum operates and turn the business into a commercially focused, profit making company, earning a reasonable return for our efforts and for the shareholders investment. Interestingly John feels economic conditions are not currently inhibitive for Fulcrum. He is optimistic and feels there is sufficient (in fact plenty of) connections work out there. Fulcrum has national field personnel, a legacy of its National Grid heritage, which makes it genuinely unique and places it in a strong position. Fulcrum is exceptionally well placed to take advantage of the major opportunity smart metering rollout will bring and John expects to be a part of this over the next 1-5 years. Fulcrum designs and delivers domestic, industrial and commercial gas connections, disconnections, meter installations, outlet pipework and multi-utility works nationwide. As part of the first phase to reach an initial set of objectives a number of changes have been put in place, explained John. First and foremost it is about getting the basic business gas connections right. It is about working efficiently and satisfying customers. We are not there yet, but did not expect to be. A cultural shift is required and that does not happen overnight. Among key business changes is the placement of Business Development Managers across the country whose remit is specifically to drive sales, improve customer interaction and deliver improved response times. Significant investment has been made in new IT and telephone systems to support the new service delivery model. New procurement processes are in place to support the design, planning and scheduling undertaken within Fulcrum, with the physical work now being outsourced to Carillion, McNicholas & Turriff covering three regions. The acquisition included 360 staff and the new Fulcrum brought with it a different way of working, which, John explained, they were keenly aware of. People find change difficult. Some embrace it, others find it harder. It is so important to be clear about why you do things and what you want to achieve and to hear what people have got to say about it. You must be fair and reasonable and take people with you, not dictate. This can be achieved through selecting and building the right management team (John has hand picked the team purposefully) and by building and communicating a clear and cohesive strategy. It is also about managing the ethos carefully and fostering the right management philosophy. Fulcrum is now settled into its new offices in Sheffield across three floors (20,500 square feet) of comfortable working space which offers an improved environment and good proximity to major transport links. It has launched a new logo and is undergoing a period of re-branding with a new website unveiled in December 2011. The new identity was developed to reflect the rapidly changing Fulcrum business and to get the message across to its customer base that this is not the old Fulcrum, that it has an entirely new way of operating probably one of the biggest challenges facing the company, shared John. The new brand is contemporary, vibrant and its interlinking bands represent the integrated business offering as a multi-utility connections specialist. We are committed to delivering market leading customer service within utility connections and these changes mark the future of the business and the way we position ourselves.
Our thanks to John Spellman for generously giving up his time for this interview and to the Fulcrum team for putting the arrangements in place, providing images etc.
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Summary
On the electricity side, notified and assumed generation availability is close to last year, but with a high likelihood of 3 GW of exports to the continent margins could be lower during a 1 in 20 demand period leading to an erosion of operating reserves. However, under such conditions system warnings would be issued ahead of time and it would be expected that the market would respond. For gas, the demand from power generation is forecast at the low end of the range due to current fuel prices indicating coal running at baseload during the winter. This is forecast to limit levels of demand side response, since the majority of this is provided by power generation. Providing there are no supply losses, under average conditions forecast supplies should be sufficient to meet demand, under severe conditions some level of market response, either reduced demand or increased supply, would be required in order to balance supply and demand.
Electricity
As mentioned above there is a high likelihood of exports through the interconnectors at times of peak demand. This is due to GB forward prices being lower than European forward prices, partly because of the German nuclear closures this winter. Forecast Normal Demand Levels - 55.8 GW down from last years actual peak of 59.7 GW Forecast Average Cold Spell Demand levels 57.9 GW Forecast 1 in 20 Demand Levels - 59.5 GW Generator Capacity 81.3 GW up from last years 77.7 GW Assumed Generation Availability (Not including Interconnectors) 61.3 GW
mcm/d
450 400 350 300 250 200 Peak day NSS Storage Supply Range Very cold week Protected Demand Very cold month Other Large Loads Very cold winter Large Loads DSR
Gas
Peak gas demand forecast is 474 mcm/d, this assumes relatively low gas for power generation hence reduced options for any demand side response. There is little change in the winter long demand forecast for 2011/12 except for lower gas for power generation.
Further Information The 2011/12 Winter Outlook Report is available at: http://www.nationalgrid.com/uk/Electricity/SYS/outlook/ For a detailed view of the supply/demand balance as the winter progresses: http://www.nationalgrid.com/uk/Gas/Data/GBA/
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Member Directory
GAS STORAGE OPERATORS GROUP BGE Ltd (Bord Gais Eirann) Centrica Storage Cheshire Cavity Storage Group Ltd EDF Trading Gas Storage Limited E.ON Gas Storage UK Ltd Eni Uk Ltd Gateway Storage (Stag) Halite Energy Group INEOS Enterprises Ltd Infrastrata Scottish Power Gas Transportation Hatfield SSE Hornsea Ltd Star Energy Group plc Statoil Storengy WINGAS Storage UK Ltd DISTRIBUTION & TRANSMISSION EQUIPMENT GROUP Aeon Pipe Systems Ltd AVK UK Ltd Caldervale Technology Ltd Crane Ltd t/a WASK Drain Center Fiorentini UK Limited Fusion Provida Limited Gas Measurement Instruments Ltd. George Fischer Sales Limited GPS nrg2 PLCS Limited Radius Systems Ltd Sarco Stopper Limited Syddal Engineering Limited Synthotech Special Products Limited Tyco DATA & COMMUNICATIONS MANAGEMENT Alcatel Lucent Arqiva Electralink ELEXON Ferranti Computer Systems Hewlett Packard Logica UK Ltd Sensus Conservation Solutions Serck Controls Ltd Utiligroup Ltd NETWORK ENGINEERING GROUP AMEC Group Limited Balfour Beatty Utility Solutions Bureau Veritas Carillion Utility Services Clancy Docwra Limited Enterprise plc Fulcrum Future Energy Group GL Noble Denton Morland Utilities Ltd Murphy Pipelines Limited National Grid Northern Energy Connections Ltd Northern Gas Networks Ltd P N Daly Limited PMI Denholm Squire Energy Ltd Veolia Water Outsourcing Ltd METERING SERVICES GROUP EDF Energy Customer Field Services Energy Assets Ltd (was Pulse 24) E.On Energy Services G4S Utility Services Ltd Lowri Beck Services Ltd OnStream Providor Siemens Metering Services Tuffentech Services Ltd METERING TECHNOLOGY GROUP D I UK Limited Elster Metering George Wilson Industries Limited Itron Metering Solutions Landis+Gyr Secure Meters ASSOCIATE MEMBERS A B Rhead & Associates Ltd BG Group plc ByBox Capita Symonds Ltd CEVA Logistics Limited CNG Services Ltd Cripps Sears Develop Training Ltd Distribution & Transmission group DHL Exel Supply Chain Engage Consulting Enzen Global Ltd Generis Technology Ltd Gerald Eve LLP Gtc Jonathan Lee Kingsley Plastics Ltd Lightsout Computer Services Street Work Solutions Turner & Townsend Wilcock Consulting Xoserve
New Member
We at ElectraLink understand the inherent complexity of smart metering commercial and technical interoperability and have led industry debate in this area for many years.
We are now focused on deploying new data and governance services to support the future objectives of the utilities industry in a Smart, low carbon future. Crucially, this includes working to meet the Smart needs of security, cost effective implementation and competition. Security - ElectraLink has been providing secure data transfer services for the energy industry since 1998. We have ensured that no known security breaches occurred during our existence and are confident that by meeting the new requirements of the DCC we will help to ensure security of data for the UK energy industry. Low Cost - Since 1998 we have consistently driven down the costs of our data transfer services to industry. Market participant use of ElectraLinks existing infrastructure to support the introduction of Smart metering will allow overall industry costs to be further reduced. Competition We facilitate competition in UK energy by creating a level playing field. Every day we enable the transfer of hundreds of thousands of files between industry participants and administer the codes that govern industry interoperability. ElectraLinks services mean that any new entrant can access at low cost market data across the entire electricity market through our network. ElectraLinks Network, Governance and Professional Services aggregate to create a compelling set of capabilities to facilitate the deployment of Smart. ElectraLink operates across four key service offerings: Network & Data Services - Industry grade, secure, structured data transfer services and business critical reporting across the electricity and gas industries, delivering tailored, cost effective solutions. Governance - Market-leading, comprehensive governance and secretariat services embracing all technical and commercial rules and obligations across electricity and gas. Professional Services - Reliable insight and advice on setting up new and enhanced data transfer processes and specialist impact analysis of governance issues in support of utility organizations, service providers and system integrators. Smart Metering - ElectraLinks services are critical to delivering Britains Smart energy future, in particular helping the energy industry deploy and ensure the interoperability of Smart metering. Our core capabilities seamlessly interlink, enabling us to provide a comprehensive service to our clients and to work as a cross-industry co-ordinating body, bringing multiple participants together and assisting in the agreement of energy industry change. For further information please contact ElectraLink on 0207 432 3000 or smart@electralink.co.uk
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www.utility-business.org
Viewpoint
In the UKs energy distribution sector, power and gas network asset owners are natur environment regulated by Ofgem.
Since privatisation commenced in the 1980s the regulatory landscape facing the sector has evolved dramatically with developments across many areas including corporate ownership, structural change, the development of different operating models and a concerted focus on driving greater levels of efficiency across capital and operational programmes of work. The current DPCR5 and GDPCR review periods are a clear example of this with power and gas distributors today facing an increasingly testing performance challenge. With industry data indicating that the difference between the upper and lower quartile performers in the sector can be anywhere between 20-30%, operators are now being placed under greater scrutiny than ever before to reach best-in-class levels of efficiency that have already been achieved by some players within the market. As a result, operators are looking at a variety of areas to determine where improvements can be made that will help them outperform these regulatory settlements. The opportunities are there for operators to make efficiency savings in both core operational issues and in their future investment decisions. From an operational perspective, some of the areas where operators can drive improvements include their approach to commercial and contract management, the way they measure network performance and health, their strategy for getting more from ageing assets and their ability to benchmark the efficiency of programme delivery. When it comes to future investment decisions, the emergence of smart-grid technology, external pressures to deliver a low-carbon future and changes to the cost of capital are all areas that afford operators the opportunity to drive efficiency savings and receive incentive benefits.
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Develop and adhere to a robust asset management plan: An organisation that holds itself accountable when it comes to following a clear asset management plan that includes end-to-end commercial processes and change control is one that will have the appropriate governance in place to efficiently manage capital and operational work programmes. Typically, many distributors look to the execution phase of delivery for efficiency improvements, and whilst much of the scope to do better can be found in this phase of the delivery cycle, unless improvements are made in the asset management and procurement organisations, the overall benefits will always be constrained. Scheme planning and asset condition monitoring will also be key enablers for delivering sustained capital and operational efficiencies. Introduce a commercial edge to programme management: Establishing commercially-led programme management that drives earned value, aligned to robust cost control mechanisms and transparent cost assurance is now being recognised by energy distribution operators as a key part of any successful delivery organisation. With this approach the Programme Management Office (PMO) should act as a central information hub where programme and project status are reported and health checks are maintained. At the minimum level the PMO should collate, interrogate and report on scope, schedule (time) and cost, however as organisations evolve and mature the PMO remit can also be extended to encompass commercial, SHEQ (Safety, Health Environmental and Quality), training, recruitment and even the programme or project management delivery function itself, including gateway governance. The PMO is typically seen as providing holistic governance of a particular programme of work, e.g. capital
programme, but can be incorporated at the Enterprise level to provide additional assurance. Building integrated plans that are baselined and utilised across the business to deliver interrelated programmes of work is essential in providing transparency for the PMO to effectively operate and ensure that programme delivery is appropriately supported. This transparency and governance also assists with enabling effective contract management and in ensuring that procurement and supply chain strategies are aligned to regulatory incentives, the long term asset management plan and unit cost measurements.
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VIEWPOINT
egulatory Challenge?
www.utility-business.org
ByBox specialises in providing field service supply chain solutions to businesses who operate field teams around the UK and Europe.
The ByBox model works by delivering in night pre 8am to a network of drop boxes around the UK. ByBox can provide warehousing, collections, stock management, distribution, returns, repair and engineering resource. All with 100% traceability on the unique Thinventory platform.