Utility Business Spring 2011

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UTILITY BUSINESS SPRING 2011 THE QUARTERLY PUBLICATION FROM SBGI UTILITY NETWORKS In this issue: > POWERING EUROPE’S FUTURE BritNed UK/Dutch Joint Venture > TACKLING DISRUPTION ON OUR ROADS NJUG CEO Les Guest Talks Utility Street Works > SMART METERING UPDATE Where to in Phase 2? > LEADING VOICE Utility Business Talks to Les Dawson

SHALE GAS

IS FRACKING THE ANSWER? Fifteen things you need to know about Shale Gas

SBGI Utility Business Spring 2011 Your New Look Utility Business Magazine is here…

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SBGI Utility Networks

Welcome

Director: Martin Atkinson martin@sbgi.org.uk

01926 513760

Administrator: Ana Ray ana@sbgi.org.uk

from your editor

01926 513761

I am delighted to bring you the first issue of the ‘New Look’ Utility Business and really hope you enjoy the mix of articles and features, as well as the contribution from leading Industry figures.

Marketing & Communications Manager: Caroline Taylor caroline@sbgi.org.uk 01926 513762 Services Manager: Vanessa Webster vanessa@sbgi.org.uk 01926 513763 Services Manager: Gary Cottrell gary@sbgi.org.uk

01926 513764

International Services Manager: David Wilson davidw@sbgi.org.uk 07774 441228 =================================== Chairmen Utility Networks Board: Steve Murray (National Grid Distribution) Dist/Trans Equipment Group: Richard Stone, (AVK UK Ltd) Network Engineering Group: Ian Foster (Fulcrum)

The cover feature of this Spring issue comes from popular energy blogger Nick Grealy, No Hot Air. I attended a Shale Gas Seminar back in January where Nick, a strong proponent, was speaking, and the event highlighted the growing significance of Shale and considerable implications it is having on the global energy landscape.

Also in this issue, BritNed Development Ltd share some interesting facts on their electricity interconnector in the ‘Powering Europe’s Future’ article. The Joint SBGI/ENA Street Works Seminar in February facilitated an interview with CEO Les Guest – also see what the DfT revealed in their keynote address in the event report accompanying the interview. I was privileged to spend a couple of hours in February at Utility and Civils experts Murphy’s London head office and talk to their new Non Executive Chairman, Les Dawson, the focus of our new Leading Voice feature.

And not forgetting a new column by Dr Michael Pollitt of Cambridge University in our Regulatory Update and finally the brand new ‘Viewpoint’ piece, where you get to share your opinions, views and comments on industry topics. I hope you enjoy your read. If you have any news to share regarding developments in your own company for the next issue, please do drop me a line.

Caroline Taylor, Editor caroline@sbgi.org.uk

In this issue…

Metering Services Group: Iain Heffey (National Grid Metering)

Features

Metering Technology Group: Jeff Cooper (Elster Metering)

Shale Gas - Is Fracking the Answer?

Gas Storage Operators Group: Roddy Monroe (Centrica Storage)

Powering Europe’s Future

Data & Communications Management Group: Mike Buss (Sensus Conservation Solutions) =================================== Editor/Enquries Caroline Taylor caroline@sbgi.org.uk 01926 513762 ISSN Number 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

www.utility-business.org

THE QUARTERLY PUBLICATION FROM SBGI UTILITY NETWORKS WELCOME FROM YOUR EDITOR // CONTENTS

UB

UTILITY BUSINESS

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Fifteen things you need to know about Shale Gas

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BritNed UK/Dutch Joint Venture

Smart Metering

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14

Where to in Phase 2?

Tackling Dispruption on our Roads

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9

NJUG CEO Les Guest Talks Utility Street Works

Leading Voice

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Utility Business Talks to Les Dawson 12

Regulars Utility Networks News Regulatory Update Industry News New Members Member Directory Viewpoint

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SBGI Utility Business Spring 2011

Utility Networks News Transforming Utility Performance 2010

National Grid Liaison Meeting On January 28 the Utility Networks Division hosted a “Talking Networks” workshop with National Grid and 17 member companies.

Tracy Hine, Stakeholder & Engagement & Business Manager for National Grid, opened the meeting and introduced the key themes. Tracy outlined their commitment, in the changing regulatory environment, to greater transparency and dialogue with their customers and stakeholders. As part of the new RIIO-GD1 Price Control Review, National Grid launched an initial consultation in July 2010. Conclusions from the initial consultation and workshops, such as this one, will help shape their business plans, to be submitted to Ofgem in July 2011.

Specifically they are seeking views on seven themes: n Safety of the public and employees and contractors n

Reliability of the energy delivered

n Environmental impact of the business and facilitating development of a low carbon economy n How to connect customers to the distribution systems n How Customer Satisfaction is measured and improved n

How Social Obligations are delivered

n Helping the Industry Work Better now and in the future.

National Grid has launched a dedicated website at http://www.talkingnetworksngd.com which

highlights how to get involved and contribute to feedback and views.

Steven Vallender, Sustainable Networks Manager for National Grid covered the Future Energy Challenge reviewing the various scenarios and the major role of Gas in the GB energy mix for meeting 2020 renewable energy and 2050 carbon targets.

Richard Court, Head of PCR Outputs & Incentives covered Safety and Reliability and Security of supply, including a review of their current activities and approach, investment planning, asset management and 30:30 mains replacement programme.

Lee McEwan, Operations Manager – GDPCR, presented on Street Works issues, reviewing the impact of the Traffic Management Act and implications for National Grid.

Members took part in two facilitated break-out sessions to discuss their perspectives on gas safety and reliability, and mains replacement/ street works issues. Lively debate amongst members took place and constructive feedback was given to the NGD stakeholder team.

Concerns over sustainability, changing business models and new technologies are transforming the utility sector and forcing constant change on all participants in the industry.

90 senior representatives from the industry gained valuable insight into how other companies are managing strategic transformation and change, at SBGI’s annual Transforming Utility Performance seminar back in November 2010. Held at the Heritage Motor Centre, Gaydon, the seminar provided opportunity to learn and debate not only the issues which have influenced the direction particular companies have taken, but also how they plan to meet the challenges facing them in the future.

Among the highlights were addresses from some of the big utilities: EDF Energy – Mark Constable, National Grid – Brian MacNamee and Diane Whilding, Central Networks – Jim Allen, Morrison Utility Services – Andy Clark and Anglian Water – Iain Fry. Now in its sixth year, this event brought together a variety of stakeholders and was beneficial not only for the subject matter covered, but also the topical exhibition and networking it provided.

SBGI is grateful to the support of seminar sponsors Central Networks, Datamonitor, DHL Supply Chain, Oakland Consulting and exhibitors Develop Training and CTrack.

We would like to thank members for their attendance and participation and the National Grid team for a thoroughly stimulating morning meeting. > Delegates heard from a wide range of speakers at this year’s seminar

International Services Update Meeting with the UKI BC

WGC 2012

Gastech

The International Services team were pleased to host a series of meetings at Camden House between a number of Members and the newly appointed Head of Energy and Advanced Engineering at UKTI in Delhi, at the end of January.

“Are we too late to sign up for the World Gas Conference and Exhibition in Kuala Lumpur in June 2012?”.

As Utility Business went to press the International Services team were putting the final touches to plans for Gastech 2011 in Amsterdam on 21st – 24th March. With five exhibitors on the SBGI Stand, watch out for the report on Gastech 2011 in the next edition of Utility Business.

The visit was supported by the UK India Business Council and was designed to develop better links between UK companies and trade associations with UKTI staff working close to developments on the ground in rapidly developing markets in India.

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It may sound a crazy question with fifteen months to go to the event but with Exhibitor space at a premium the short answer is no – but you don’t have long to secure the last remaining space on the SBGI members stand - so act now. Please see contact details below should your company be interested in exhibiting at this premier global gas event.

For information on any of the above matters please don’t hesitate to contact David Wilson, International Services Manager, or Ana Ray here at SBGI Utility Networks. davidw@sbgi.org.uk / ana@sbgi.org.uk

www.utility-business.org

Energy Bill

Smart Metering

The Energy Security & Green Economy Bill 2010/2011 continues its legislative track through parliament. The Bill seeks to provide a step change in the provision of energy efficiency measures to homes and businesses, and make improvements to the framework to enable and secure low carbon energy supplies and fair competition in the energy markets. It seeks provisions for: Green Deal and Smart Metering roll-out to 2018, Electricity and Gas security of supply and low carbon generation – offshore and nuclear, among other things.

As the Smart Meter Programme moves from Phase 1 to Phase 2 the management of the programme also moves from Ofgem E-Serve to DECC, who will be taking forward the implementation phase of the programme. For further information see the update on page 16.

Electricity Market Reform Perhaps the most important consultation to emerge for some time is the Electricity Market Reform, which will require further legislation beyond the Energy Bill. With the committee on climate change recommending a complete decarbonisation of the power sector by 2030, and with the enormous requirement of £200bn investment by 2020 required (Ofgem figure) to be made in new or replacement generation, electricity network and gas infrastructure assets, the consultation is certainly timely. More so since gas-fired power generation continues to offer a low risk and low cost solution.

Key proposals include:n Supporting the carbon price to encourage investment in low carbon technologies n Making clean energy investments more attractive still through feed-in tariffs n Encouraging the construction of flexible reserve plant or demand reduction measures (so-called negawatts!) n Enforcing a back-stop limit on how much carbon the most carbonintensive plant (coal) can emit.

Other measures include rules for protecting existing low carbon investments.

Overall the package of measures is expected to deliver in the long term lower bills than the current market model. The Government will publish a White Paper in spring 2011 incorporating a response to this consultation, together with its view on the future role of regulators.

UTILITY NETWORKS NEWS // REGULATORY UPDATE // THE DR MICHAEL POLLITT COLUMN

Regulatory Update Smart Grids Building on the rollout of smart meters, DECC is considering the potential for storage, interconnection, smart grid technologies and demand-side management, as well as more conventional technologies, to address future network management and system balancing challenges. DECC and Ofgem are establishing a Smart Grids Forum to explore these issues which will feed into a strategy for future networks, supply and demand balancing and smart grid development and form part of the Electricity Market Reform White Paper.

RIIO Price Controls Ongoing and of great interest to supply chain members are the price control reviews for the regulated transmission and gas distribution networks.

SBGI is represented at the Price Control Review Forum (for stakeholders)

by Utility Networks Director, Martin Atkinson, and with two meetings already having taken place it is clear that the iron mains replacement programme is a key issue for the gas distribution review, and one where clarity is expected only after the HSE completes its review of current replacement policy. The new ‘RIIO’ framework being used by Ofgem for the first time in these reviews is certainly delivering a step change in stakeholder consultation – we hope the views offered

by SBGI members will shape the networks business plans being produced in July.

The next issue of Utility Business will analyse these policy and regulatory changes and help assimilate the impact and opportunities presented to the supply chain. With the outcome of the Renewable Heat Incentive (RHI) also expected in the Spring, and its potential as a stimulus for biomethane-to-grid investment, it promises to be an exciting and interesting time for the entire utilities sector.

The Dr Michael Pollitt Column

DELIVERING THE UK’S LOW CARBON ENERGY FUTURE The government has announced ambitious plans to reform the UK’s electricity market (EMR).

It has four main elements: an emissions performance standard, contracts for difference for low carbon generation (CFDs), a carbon price support and a targeted capacity mechanism. The amusing thing for an academic economist is the sight of a reform package so motivated by the theoretical and empirical science of the climate problem that pays so little attention to the theoretical and empirical social science of energy policy. Of course EMR is not just about climate change, it is also about energy security and about supporting the achievement of the (insanely expensive and probably unachievable) EU renewable energy target for the UK. The fundamental problem with the EMR proposals is the intellectual and empirical basis for doing anything other than simply raising the price of carbon dioxide emissions. The EMR’s analysis claims that this would not be the least cost option: assuming that some of the proposed interventions would actually reduce the cost of capital relative to the imposition of a stable carbon tax.

What the analysis conveniently leaves out is that using

a carbon tax would transfer large sums to the Treasury, while the government’s proposed measures unnecessarily leave large additional sums with, mostly, foreign owned shareholders.

The policy also ignores academic logic on the issue of the EPS and a targeted capacity market. The EPS is irrelevant in achieving any of the government’s policy objectives for the sector - who would invest in unabated coal fired generation? A targeted capacity mechanism is distortionary and would probably do more harm than good, only a capacity market covering all capacity has any intellectual rationale and only then when energy prices are capped at a low level.

CFDs do not make sense for established technologies and still leave open the problem of how on earth (or more precisely who on earth) to decide the quantity of each type of low carbon generation. We do need learning subsidies for immature renewable technologies and we do need carbon pricing to favour low carbon generation, but a comprehensive system of support prices for all technologies (except natural gas generation) seems unworkable.

So what would a sensible EMR look like? Well, we should not start from here.

The reality is that we need to recognise that the world has changed: international agreement on climate change policy looks very challenging and national finances are tight. Our only sustainable long term option is to go for a reform of the EU Emissions Trading System and the introduction of sensible learning based subsidy schemes for renewables. If we can’t get the EU to strengthen the EUETS and to bring sense and coordination to renewables support across the EU, then we won’t tackle climate emissions in the EU, let alone provide a sensible role model for the rest of the world.

In those circumstances the UK’s well meaning proposals will look like expensive gesture politics of the most futile kind. The UK needs to refocus its effort on encouraging sensible EU policies, not on complicated and expensive domestic electricity market reforms. Academic pie in the sky?

Maybe... But then again so is the actual climate problem we are trying to address...

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. Since 2007 Michael has been external Economic Advisor to Ofgem, advising on Project Discovery, the Fifth Distribution Price Review, the LENS project, RPI-X@20 and the Smart Meter roll out, among other projects and is currently an advisor on Ofwat’s Future of Water project. He is also Assistant Director of the ESRC Electricity Policy Research Group.

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SBGI Utility Business Spring 2011

Industry News New Chief Executive at Northern Gas Networks Northern Gas Networks has appointed a New Chief Executive.

Mark Horsley took up the position early this year and succeeds Basil Scarsella, who was recently appointed Chief Executive Officer of UK Power Networks, in London.

Both Northern Gas Networks and UK Power Networks are owned by the Cheung Kong Group, based in Hong Kong. Mark Horsley was a Partner at EC Harris, an international built asset consultancy, and prior to that was a Director at Scottish Power.

Enterprise Acquire Gas and Power Meter Installation Operations

G4S Wins Second Change of Directors’ British Gas Business Responsibilities at Smart Metering Contract National Grid

Enterprise has purchased the gas and power meter installation and support operations of United Utilities Group plc (UU).

G4S Utility Services has been awarded a second three year £12m contract to deliver full end to end Smart metering services including smart & legacy MOP to British Gas Business. In October their contract covering electricity and gas metering services commenced on a staged basis across Wales, the Midlands and South of England. Under the second contract they will service the North of England and Scotland.

The UU meter business procures and fits around 330,000 meters each year and subsequently manages the devices. It is located mainly in the Midlands and the North of England.

The transaction includes the acquisition of the operational and training headquarters of the business, both of which are based in Manchester together with some 500 employees, the majority of whom are skilled meter installers.

Kim Challis, Managing Director, G4S Utility Services, commented “British Gas is our largest customer and we already deliver a wide variety of services to British Gas Business. This contract will make us a major meter operations service provider in the UK market at a key time.”

National Grid plc has announced a change of group executive responsibilities.

Nick Winser will assume the position of Executive Director, UK, responsible for all UK businesses, and will take up responsibility for the UK Gas Distribution business from 1 March 2011.

As a result, Mark Fairbairn, currently Executive Director, Gas Distribution, will step down from the Board and leave National Grid at the end of March 2011.

Wilcock Open New Midlands Office Wilcock Consultants Ltd (WCL), an outsourcing specialist for the downstream natural gas industry based in Barrow in Furness, has opened new offices in Coventry. The office, located in Meriden, not only offers the Midland’s based team expanded office space, but is ideally located to service major client Onstream as well as other WCL clients.

The Meriden office will home WCL’s dedicated Metering Services contract team and enable WCL to work closely with Onstream to provide support and management for up to 200 gas, electric and SMART meter workers and a number of support resources such as drivers and stores personnel.

The WCL team bring a wide range of professional skills and capabilities to the contract and provides many added value services to the client. Key activities include resourcing and recruitment, human resource management and the management of comprehensive administrative systems and processes. > Ann Hollingsworth, Graham Wilcock, Managing Director and Pollie Lynch

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The new office was formally opened on January 11th by Managing Director Graham Wilcock. For more information see www.wilcock.co.uk.

www.utility-business.org

INDUSTRY INDUSTRY NEWS NEWS

Kingsley Plastics Announces Renewal of Significant Contracts Kingsley Plastics Ltd, the GRP Housings and Odour Control Covers manufacturer, has announced the renewal of its contracts with Scottish & Southern Energy and Scotia Gas Networks (SSE/SGN) to design, manufacture and deliver a wide range of GRP Meter Cabinets and Housings across the UK. The contract has an annual supply of in excess of 300+ GRP Housings and will run until 2014. Kingsley Plastics offer a next day delivery service given an order is received by 10.00am. The contract includes provision for supplying enclosures and cabinets complete with explosion relief roofs and free air ventilation.

In addition Kingsley Plastics have been successful in once again winning the contract for the larger walk-in type GRP Substation Housings for Electricity North West, formerly known as United Utilities Plc. The 5 year framework applies to the design, manufacture, delivery and installation of the complete range of GRP Substation modular buildings including anti-vandal textured finishes and smooth moulded and simulated Brick & Stone buildings.

For more information see www.kingsleyplastics.co.uk

> Greg Barker Visits Energy House

DECC Publish Plans for Smart Meter Rollout Government has published plans for smart meter rollout, including data security, impact assessments and an implementation strategy, which will start in 2014 and be completed in 2019.

The project will see 53 million smart meters installed in 30 million homes and businesses across the country and will be conducted in two phases. The foundation stage will test and build the necessary systems and see the set up of the data and communications company.

Unique Energy House Constructed A traditional-style terraced house has been built inside a three-storey, sealed testing chamber at the University of Salford.

In addition to its original brickwork and roof, the world’s first ‘Energy House’, is also fully furnished and fitted as a typical working home with fully functioning water, gas and electricity supplies.

The house - built in the same style as 4.5m pre-1920 UK homes - will be subject to some of the most advanced energy experiments ever conducted on a residential property to gauge how its energy consumption varies depending on variable factors and conditions.

The testing chamber will feature a unique climate system which will generate a range of rain, wind and solar conditions. By studying the different ways the house consumes energy, the University intend to devise ways to improve its efficiency. Climate Change Minister Greg Barker officially launched the Energy House on February 2.

The house is the centre-piece of the University’s new ‘Energy Hub’ - a multi-disciplinary research centre drawing on the expertise of over 25 academics from 13 departments, and a centre of excellence for energy research in the UK. Its findings and facilities will be utilised by academics, students, government and business.

The groundwork will then be laid for the second phase mass rollout.

Budget 2011 The Chancellor of the Exchequer’s 2011 Budget contained measures to support investment in low carbon energy projects: Green Investment Bank Initial capitalisation of the Bank will be £3 billion, it will begin operation in 2012/13 and will have borrowing powers from 2015/16 and once the target for debt to be falling as a percentage of GDP has been met.

Carbon Price Support A floor will be introduced to the carbon price for electricity generation from April 2013. This will start at around £16 per tonne of carbon dioxide and move to a target price of £30 per tonne in 2020.

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SBGI Utility Business Spring 2011

Industry News

91 per cent Growth for UK Wind Energy Employment RenewableUK has published comprehensive employment figures for the wind energy industry, showing a 91 per cent increase in full-time employment in the sector between 2007/8 and 2009/10. The growth in employment stands in contrast to the overall UK employment level, which has contracted during the same period by 3.4 per cent.

The study was jointly commissioned by RenewableUK and EU Skills. RenewableUK has also analysed potential UK employment in the sector by 2020, according to a range of industry development scenarios.

Ofgem Awards £62 Million from Low Carbon Networks Fund Ofgem has awarded funding from its £500m Low Carbon Networks Fund to four smart grid demonstration projects which will each receive a share of £62m. The successful projects, selected from a short list of 11, are: Customer-led Network Revolution

Low Carbon Hub

Receiving the largest award a consortium-led by CE Electric, will receive £26.8m. The project in the north east is exploring how a combination of smart technologies and changes in customer behaviour can reduce the costs associated with low carbon technologies. The project uses British Gas’ early roll out of smart meters and low carbon products such as solar panels and heat pumps. It also sees CE Electric working with a variety of partners, including Durham University.

The Central Networks project received £2.8 million and will take place in East Lincolnshire and will investigate ways of increasing the amount of electricity generation - mainly wind - that can connect directly to the local electricity network. The project will benefit small, renewable generators who want to connect directly to the distribution network.

Low Carbon London

Western Power Distribution’s project in South Wales received £7.8 million. It will examine the effect that low carbon technologies have on the network. The trial will help other companies become more efficient by allowing them to anticipate network behaviour. It will work with existing Welsh Assembly Government and npower initiatives and contribution from the Universities of Bath & Bristol.

The UK Power Networks project, which received £24.3m, is a “smart city” initiative for London that will explore how to best use new technologies and active network management. The project will also seek to understand when, how and why consumers use energy and how this can be influenced.

This will work on the back of several existing low carbon projects, such as the Plugged in Places Scheme that encourages use of electric cars. The project will be carried out in partnership with a number of organisations throughout London, including EDF Energy, Imperial College, Logica and Transport for London.

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Low Voltage Network Templates

Ofgem’s new regulatory model for setting price controls will expand funding for innovation across all network sectors, not only electricity distribution, from 2013.

INDUSTRY NEWS // SHALE GAS - IS FRACKING THE ANSWER?

UTILITY BUSINESS www.utility-business.org

FEATURE

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SBGI Utility Business Spring 2011

Nick Grealy, leading energy blogger and author of the popular ‘No Hot Air’ web blog discloses fifteen things you need to know about shale gas.

1. What does shale gas mean exactly?

Shale gas is the exact same as natural gas from the North Sea or anywhere else. It doesn’t need any extra processing or treatment. Shale refers to the shale rock where it is found. “Conventional” natural gas is generally found in reservoirs between layers of rock. Conventional gas is easy to drill but hard to find. Shale gas is gas trapped in the shale rock itself. Everyone knew theoretically that the gas was there, but there was no method to extract it until about ten years ago. Shale is hard to drill, but easy to find once the shale play is proven.

These days, dry holes in gas shales almost never happen.

Shale gas development was a result of using horizontal drilling techniques first used in offshore oil drilling and a technique called hydraulic fracturing. Shale is generally found much deeper than conventional gas reservoirs at over 3000 meters compared to only a few hundred.

2. Is shale gas expensive?

Shale techniques started out expensive, but the continuous improvement in drilling technology combined with far higher flow rates and 100%

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success rates now make shale cheaper than conventional gas in North America where the industry was born.

3. How much shale gas is there?

The one thing I’ve learnt in studying shale over the past three years is not to underestimate production quantities. Extractable US gas reserves increased 40% from 2007 to 2009. The 2009 to 2010 estimate was for a further 25% increase.

Arguing over whether there are 100 or 200 years of gas is pointless. Shale will outlive everyone alive today for sure.

allowed the directional drilling and fracturing to release incredible amounts of energy. The UK for example used 85 Billion Cubic Meters of gas in 2009. Gas production in Tarrant County Texas alone was over 4 BCM in Q3 2010. Several larger shales are being exploited in Texas, Louisiana and Arkansas, but the true surprise was the discovery of the world’s second largest gas field in the Eastern US centered in Pennsylvania. That field has over 14 trillion cubic meters, enough to supply the UK for over 160 years. The field was not even producing until 2007, yet it produced over 7 BCM in the last half of 2010. And it is very early days there yet.

4. What is the one key fact about shale?

6. Is there shale outside North America?

Energy security is a dead issue. The issue in natural gas has changed from fears over supply to how to create demand.

Without a doubt. Exploration is going on in China, India, Australia and Argentina. Preliminary indications are that reserves match or even exceed US shale.

5. Where are the shale plays in North America?

Modern shale started out in what is called the Barnett Shale in Fort Worth Texas. Drilling deeper than depleted oil wells closer to the surface

7. Is this gas impacting gas prices today?

Gas is priced in two ways. Older gas, based on the shortage scenario, was often priced against oil.

Shale gas is having a major impact via gas -to -gas

www.utility-business.org There is enough LNG alone to supply European and Asian demand. European gas demand is flat due to mature markets that are increasingly energy efficient. Although Chinese and Indian demand is surging, there is both enough LNG to satisfy their needs and the two countries are well advanced in learning how to access their own considerable reserves.

8. Is there shale in Europe?

Certainly. The first exploration took place in Poland and we can expect revelations of actual reserves sometime during 2011. Initial indications are extremely positive. Experts believe Europe has reserves in most counties with estimated reserves over 80 trillion CM, 12 times today’s reserves.

9. What about the UK? Firstly one must note that when the full impact of shale exports via LNG come on line mid-decade, energy security fears will disappear and prices will fall quickly as reserves are found globally.

The good news that is developing in these early days, is that it appears that the UK also has game changing shale deposits.

Geologists had estimated the most attractive areas as Dorset, Isle of Wight, Hampshire, Surrey, Sussex and the East Midlands. But a surprising site with excellent indication of success that should be revealed this year may well be the Bowland Shale near Blackpool. Exploration is also under way in Scotland, Wales and the Republic of Ireland.

10. What impact will shale have on UK energy policy?

Key components of UK energy policy such as more generation from nuclear, Coal Carbon Capture and Storage and off-shore wind, depend on a fear of gas being either insecure or expensive. We’re now in the period where market players as diverse as green, nuclear, coal and Russia are united in trying to downplay shale’s potential while exaggerating alleged environmental downsides. We await confirmation of actual reserves and when they will come on line. Even if shale takes several years to develop, knowledge of the reserves’ existence will have a huge impact on perception even without any actual production.

11. How do you answer the environmental questions?

Many of the objections are either out of date or unproven. Shale well pads can now be placed so they have one location of five acres covering over 5 square miles. That well pad will only exist for a few months, after which the site can be left in its original condition. A shale well sounds very hungry for water resources, using over 5 million gallons, but that is only a fraction of water that is lost in leaks or used in cooling coal or nuclear powered generations. A shale well uses the same amount of water over ten years as used by a golf course in a month for example.

The use of chemicals sounds alarming, but the UK would insist on full disclosure and the Blackpool wells use 99.8% water and sand. The remaining 0.2% of only two chemicals are widely used in applications such as disinfectant and contact lens fluid.

Unlike in the US, European regulations require water that comes out of the well to be re-injected deep into the earth where it is impossible for it to come to the surface. One must also consider that shale drillers have an incentive to use as little water and chemical as possible as both can be expensive. In the US up to 70% of all shale water is now recycled for example. One has to understand that as shale comes in to areas unfamiliar with gas or oil, anything unknown is feared. I’m confident

SHALE GAS - IS FRACKING THE ANSWER?

pricing in world markets via LNG. The US built six LNG import terminals in the early 2000’s and multiple export capacity was built in Qatar, Nigeria, Yemen, Peru and other places to serve them. But today, the US no longer requires LNG and Europe is benefiting from a buyer’s market in gas that looks to last for many years. On top of that, both the US and Canada are set to export LNG from 2014 onwards, a revolutionary development for energy security.

that once we get to tell our side of the story, fears will evaporate.

12. How would you answer those who call for a moratorium on shale in Europe until the US Environmental Protection Agency issues their report?

Shale in Europe is now only in the experimental stage where explorers are only proving the extent and viability of any future production. Delaying shale will only delay carbon reduction further.

13. What are the markets for this new gas glut?

One obviously is in generation. We must replace all coal generation with gas as soon as possible.

Replacing coal with gas will not supply the 100% drop in emissions available from nuclear or off shore wind, or the 85% drop from coal carbon capture. But it will provide an up to 70% drop far quicker and far cheaper than the far more problematic technologies of nuclear and CCS. Ironically, wind can only offer security of supply with a gas fired back up that may end up operating 55% of the time anyway.

14. Are there other uses for gas?

Natural gas can be used directly as LNG or CNG in marine, freight and fleet applications, providing lower carbon than oil and at lower cost. But shale is also proposed as replacing oil in gas to liquid technology. Finally, as natural gas is a feedstock in fertilizers and plastics, abundant gas is already revitalizing the US chemical sector and providing further deflationary pressure.

15. Will shale gas change everything as some say?

It’s far more important than that. This will transform ?economies and the societies that they are built on. Good news and energy have not been mentioned in the same breath for many years, but shale is like a winning lottery ticket we all share.

See Nick Grealy’s blog at http//:www.nohotair. co.uk or contact him on guru@nohotair.co.uk

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SBGI Utility Business Spring 2011

FEATURE

POW EUR ER OPEING ’S F UTU RE

UTILITY BUSINESS

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www.utility-business.org

POWERING EUROPE’S FUTURE

BritNed Development Limited - a 600 million euro (£493m) joint venture between UK and Dutch energy transmission companies - is a small part in a larger European super grid ambition, which would link the major power markets across northwest Europe.

The company, a 50:50 joint venture between National Grid and TenneT, has created the first electricity interconnector between Great Britain and the Netherlands and will provide a number of benefits, including: n Security of supply for north-western European countries n Significant contribution to the diversity of electricity supply both in Great Britain and the Netherlands n Open access for all market participants through explicit and implicit auctions n

Market advantages such as price levelling

Construction activities on the BritNed project started in 2008, and the cable was laid in sections over a two-year period from 2009 to 2010. Once operational, BritNed will have a capacity of 1000 MW of power flowing beneath the North Sea floor between Maasvlakte, near Rotterdam, and the Isle of Grain, on the coast of Kent. The power can flow in both directions responding to the level of supply and demand for electricity in the markets.

BritNed was a major engineering challenge and its multinational construction partners worked as a single team to safely design, manufacture and install the 260 km bi-pole interconnector.

Two identical converter stations have been built in Maasvlakte & Grain to take in AC current from the TenneT & National Grid Transmission Networks and convert to DC current, which is the better way of moving 1000mw of power along 260 km of subsea cable. The interconnector actually consists of two twin cables running side by side giving dual polarity.

ABB manufacturing supplied the complete High Voltage cable solution for BritNed, including cable system design, HVDC submarine and underground cables, cable accessories, submarine and underground cable laying, civil works, installation, testing and commissioning. The HVDC cables are of a ‘mass impregnated paper-insulated’ design manufactured by ABB’s specialised facility in Sweden, rated at 450 kV DC. They feature a twisted copper core with a covering of paper and steel armour soaked in oil for insulation and completed with a strong plastic coating.

Civil works on the ground were carried out by Bam Nuttall and the technical installation by Siemens.

The subsea and land route was meticulously planned, working in close cooperation with the relevant marine and local bodies, to ensure the minimum impact on the complex sediment dynamics and seabed topography of the North Sea. Onshore cable work was restricted to specific times of the year to protect the flora and fauna of coastal breeding grounds and species habitats.

BritNed intends to offer real choice about how buyers bid for capacity, ensuring that it supports the ambitions for greater transparency in the European energy markets. The link is essentially an infrastructure venture involving the construction and operation of the interconnector – BritNed will not buy or sell electricity. Its’ funding and operation is based on commercial management and is separated from National Grid’s and TenneT’s regulated activities. Power flows will be decided by companies that trade on BritNed and will be driven by factors such as the electricity demand profile in each country and the prices in each market.

BritNed will offer market participants open access through a combination of explicit and implicit auctions.

Implicit auctions – also known as market coupling or ‘exchange to exchange’ – allow buyers and sellers in each country to bid for capacity on a dayahead basis. APX has been retained to act as the implicit auction manager for BritNed and it will use the existing exchange facility in the Netherlands and the UK. Explicit auctions allow customers to buy capacity for defined capacities, flow direction and time durations (the model currently used for the FranceEngland, Dutch-Belgian and Dutch-German interconnectors). Although the nominal capacity of the interconnector will be 1000 MW, capacity may be offered to the market at levels above 1000 MW when technically possible. It is expected that 300 MW will be reserved for implicit auctions.

Both companies own and operate existing interconnectors with other countries. TenneT recently developed the world’s longest ever subsea power link –the 580 km, 700 MW NorNed link – in partnership with Statnett in Norway. National Grid jointly owns and operates the existing EnglandFrance interconnector. It also constructed the 360-km Basslink interconnector between mainland Australia and Tasmania (commissioned in 2006 and sold in 2007 to CitySpring Infrastructure Management Pte Limited).

Commercial operation of BritNed is scheduled to commence on 1 April 2011.

Many thanks to National Grid and Britned Development Ltd for providing the information/images for the compilation of this article.

13

SBGI Utility Business Spring 2011

UTILITY BUSINESS

> Gary Cottrell, Services Manager SBGI Utility Networks

14

FEATURE

Since 2009 SBGI has been working with members, Ofgem and other stakeholders to help progress the Smart Metering Programme and the development of the Technical Specification (or as it is formally known the Detailed Functional Requirements List). As we move into phase two, Gary Cottrell, Smart Metering lead at SBGI has provided this update.

www.utility-business.org

TACKLING DISRUPTION ONIN OUR ROADS WHERE TO PHASE 2?

SBGI Utility Networks has been really busy on members’ behalf in helping define the detailed technical specifications that will make smart meters and supporting systems a reality.

We were privileged to gain places on the two main expert groups and our voice has been heard throughout the hectic schedule of meetings in 2010 on the Smart Meter Design Group (SMDG) and Data and Comminications Group (DCG), as well as the various subgroups that report into these Expert Groups.

Both SBGI secretariat and members represented SBGI at these meetings to ensure we had the most appropriate expertise present at all times and that we presented views and opinions that properly reflected the membership.

Phase 2 As the Smart Meter Programme moves from Phase 1 to Phase 2 perhaps the most significant change is in the management of the programme, which moves from Ofgem E-Serve to DECC. During this changeover Ofgem and DECC have worked together to endeavour to achieve a seamless handover and avoid the work and achievements to date stalling. These efforts have, on the whole, been rewarded as there has only been a minor delay in the progression towards the Technical Specification and Rollout.

Spring 2011 also saw Ofgem bring forward a package of measures to provide for the continued safeguarding and protection of consumers’ interests. This will draw on work with consumer groups, and the programme’s Privacy and Security Advisory Group, to address potential issues.

Key dates going forward are as follows: n Spring 2011 - Detail Design starts, Enhanced consumer protections introduced as required n Summer 2011 - Functional requirements and technical specifications confirmed n Early 2012 - Supply licence modifications mandating rollout implemented n Spring 2012 - Regulatory framework relating to DCC implemented, Competitive application process for DCC licence Q1/Q2 2012 –EU Standards published n Summer 2012 - Mandated supplier rollout commences n Autumn 2012 - DCC licence granted n Spring 2013 - DCC service providers appointed n Autumn 2013 - DCC trialling and testing complete, Mandated use of DCC for domestic customers

Implementation timetable

New Work Groups A major part of the changeover process from Ofgem to DECC has been the formation of new workgroups to examine in more detail and resolve specific aspects of the overall functions and technical issues. SBGI has been successful in gaining the Chair of three of the new workgroups (Gas Meter Variants Group, Gas Meter Battery Life Group and Architecture Group). SBGI has representation on most of the other workgroups which include: Planning Drafting & Operations Group (PDOG) Home Area Network Selection Tariffs Pre Payment Meter Application Layer Installation & Maintenance Gas Meter Variants Electricity Meter Variants Microgeneration Difficult Meter Locations In Home Display Interoperability & Testing Consumer Access to Data Data Modelling Gas Meter Battery Life Extended Statement Of Design Requirements Normative References Architecture Use Cases

Participation Participation Participation Participation Observing Participation Chairing Observing Participation Participation Participation Participation Participation Observing Chairing Participation Participation Chairing Participation

Other Work SBGI will be presenting at the joint SMDG/DCG meeting, in mid Spring, on the range of HAN and WAN Architectures available.

We have also hosted a series of meeting on behalf of MAMCoP to examine the “Old Chestnuts” that have been known to the meter installation players for many years but, to which, there has not been found a practical and industry consistent solution. Many of these issues currently effect meter replacements but with the expected increase in meter replacements during the Smart Meter Rollout, MAMCoP, AMO and MOCoPA agreed to work together to find practical resolutions for industry players to work to.

SBGI is committed to being an active participant to the continuing Smart Meter Programme to ensure that all our members receive the best possible representation at the highest level within Ofgem and DECC. Look out for further updates to the progress of the programme in forthcoming issues of Utility Business. If you are interested in contributing to the work or would like information on any of the areas covered in this article please contact gary@ sbgi.org.uk.

15

SBGI Utility Business Spring 2011

TACKLING DISRUPTION ON OUR ROADS

The direct cost of Utility Street Works and highway works in the UK alone is more than £1.25 billion per year, with indirect costs associated with waste materials, disruption, traffic delays, environmental pollution and a reduced quality of life for citizens bringing costs to around £6.5 billion per year. Amounting to almost £1 million per hour, it is little surprise the subject remains high on the political agenda.

The Traffic Management Act 2004 (TMA) came into force on 1 April 2008 to help tackle congestion and disruption on the road network and to encourage better forward planning and co-ordination of street works. The TMA is a continually evolving piece of legislation and since its introduction Government has introduced updated codes of practice and a series of regulations including permit schemes, notices of work and penalties for offences.

Working on behalf of the Utilities industry, NJUG (National Joint Utilities Group) is the UK’s only Trade Association for street works issues. They promote best practice, safety, quality and co-ordination of works as well as representing utilities in discussions with Government and other stakeholders on street 16

work issues. NJUG has carried out extensive work on behalf of the Utilities to ensure that Legislation, Regulations and Codes of Practice are fair and reasonable and not burdensome.

NJUG’s Chief Executive and Street Works Consultant, Les Guest, is one of the most knowledgeable campaigners on Utility Street Works.

His enduring passion and tireless commitment make him one of the most recognised, leading authorities on the subject. Les has worked in the gas industry for over 30 years and before leaving National Grid in 2009, was responsible for their street works policy.

Les has been a Director at NJUG since 2003 and held the position of Chief Executive at NJUG between 2005 and 2007, and was appointed again in 2009 for a second tenure.

Utility Business spoke to Les about the current issues facing the industry and NJUG’s focus for 2011: UB: With the advent of the new coalition Government what were the main messages NJUG sent out?

“To be fair, reasonable and ensure no unnecessary burden is placed on utilities, contractors and their customers. To ensure that any changes that are made are robust and workable and focus on resolving key issues, not just raising revenue”.

UB: What are the key issues facing Utility Street Works in 2011?

www.utility-business.org UB: What will be NJUG’s main focus in 2011?

Which issues require particular attention?

“Our main focus for 2011 is to work with the Department for Transport (DfT) to ensure the proposed changes to charges for s74 overruns are proportionate and target key areas of disruption and that the increases should not apply to immediate works or works in footways or non-traffic sensitive roads. This will allow us all to prioritise on those works that cause the greatest disruption.

We want to work with DfT and Transport for London (TfL) who are pledging to introduce a lane rental scheme. Again, if it is the will of the government to make such a change, we want a scheme that is robust, and targets only those pinchpoints on London’s busiest roads. It must also provide workable incentives to avoid charges if works take place outside peak traffic hours, or working in conjunction with other utilities, or using innovative techniques to minimise the disruption.

Fees charged to utilities AND cross charged within TfL ought to be used for developing new technologies that benefit both utilities and Highway Authorities and reduce disruption. We also want to work with those authorities who are looking to introduce permit schemes and ensure they have a robust cost benefit business case, success is measureable and the scheme is workable. We believe that the Secretary of State should retain powers to scrutinise and approve permit schemes and not leave the decision to the authorities themselves as is planned”.

UB: At the SBGI/ENA seminar in 2010 one of the key topics was permit schemes. How has this moved on in the past 12 months and what has been learnt?

“We are disappointed that the government has made a U-turn on the independent evaluation of the effectiveness of the two permit schemes after 12 months (Kent and London). Government has indicated that authorities should report back on their own schemes, but to what extent this will be done is unknown. The two schemes are different. London applies fees to all works on all streets, Kent focuses on major works and works on the most sensitive streets. An independent review, would not only take into account authorities views but also the utility perspective of the scheme and the full costs incurred.

This would provide excellent data for those authorities who are looking to introduce schemes in 2011 and beyond.

Some of the conditions imposed by London authorities have had an adverse effect on productivity. Gas mains replacement productivity in some of the boroughs who operate a permit scheme has reduced by up to 38%. Only an independent review will ascertain if permit schemes are of any benefit to UK plc.

There are lots of authorities close to applying to run permit schemes, some on their own, some in conjunction with other boroughs. Northamptonshire came into operation in January 2011, but also expect applications from Greater Manchester, Yorkshire, Anglia and St Helens soon. An independent evaluation of current schemes would be a useful guide to these local authorities to help them understand what makes an efficient and workable scheme when developing their own”.

TACKLING DISRUPTION ON OUR ROADS

“The government has reduced local authority budgets to such an extent that they will rely on income from external sources such as utilities to achieve their targeted expenditure. There is a danger therefore that it could lead to far more claims for s74 charges, fixed penalty notices, inspection and defect fees etc. It is not only the cost of these charges, but there will be an increased cost in process and administration as well. There is a significant risk that this will result in many of the good working relationships breaking down”.

UB: Where does NJUG stand on Lane Rental and how do you think Government should proceed?

“We have no evidence that Lane Rental is necessary and believe that authorities already have sufficient powers to manage their network effectively. However, if it is the will of the government to introduce lane rental, then we want to help shape the regulations and schemes so that they are focused on key pinchpoints on highly trafficked roads, that they have incentives to avoid charges, it is not a burdensome exercise, and it is also essential that it applies to authorities as well (who occupy and disrupt roads as much as utilities) Finally, that it does not compound the charges from existing regulations, i.e. permit charges and s74 charges should not apply where lane rental applies.

Whilst supporting a scheme that is necessary due to constantly difficult road conditions, we still do not believe the principle of “booking a lane” as opposed to notifying an authority of our intention to work is the right approach and that it should attract daily fees, even when working efficiently. We want to work with TfL to ensure that solving one issue does not create another problem.

Would regulators allow all costs to be passed on? If so, why should a consumer who lives on a TfL road and wants a new supply pay £2,500 per day more than someone who lives around the corner? There are many scenarios that need to be worked through, the devil will be in the detail of the scheme. NJUG wants to ensure that it is balanced to achieve the objectives but least cost to utilities and their customers”.

UB: How important is NJUG to successful Street Works?

It is very important to have a single voice representing the whole sector. NJUG is a team made up of companies and their dedicated representatives who volunteer their services and have a passion to improve street works. Our combined experience means that we can be trusted, challenge effectively where necessary and compromise where needed. This does take away a huge burden from individual companies and helps the government by having a single point of expertise UB: Safety, quality, minimising disruption through working together, keeping the public informed, sustainability and avoiding damage to underground assets are the pillars of the NJUG Vision. How well do you think the industry is achieving the vision in each of these key areas?

“It is a journey to become the best in the world, and we are only judged by the worst team. However, we have made great progress across the UK. All NJUG members’ CEOs have signed on to the NJUG vision which has helped drive the innovation. Over the last three years, we have held the NJUG Awards to recognise achievements in each of the areas. We have received over 150 entries and therefore great case studies which demonstrates how well companies meet the high standards. These are available from the NJUG team or can be downloaded from the NJUG site.

There have been many notable improvements, but I am particularly pleased with the examples of collaboration between utility companies, contractors and local authorities to coordinate works and we have had great examples of joint occupation. Particularly in London, where Morrisons coordinated works for UK Power Networks, Southern Gas Networks, Thames Water, TfL and Southwark Council and achieved all of this in the same trench at the same time, reducing disruption by around 380 days. I am also very pleased with the major improvements in communications: the new site boards explaining what is happening, why and when works will be completed and of course the increase in electronic variable message signs which allow drivers to find alternative routes. The explanations help the public and have also reduced complaints.

17

SBGI Utility Business Spring 2011

UB: What is the relationship between NJUG and HAUC (UK)?

“HAUC (UK) is celebrating its 25th anniversary in 2011 and is made up of members from NJUG and JAG (Joint Authorities Group). For many years HAUC (UK) failed to deliver important changes in a timely manner. This may well have been down to conflicting objectives or even conflicting personalities. We are trying hard to put this into the past and already have a far better relationship and we are using the strap line “Working together, better” We have changed the main theme of the meetings to promote more good practice and activities from the regions and the more collaborative approach seems to be working well. We now have strategy meetings with DfT and the devolved governments to set business plans that we can all work towards which is very helpful and keeps us all better focused on improvement. We will probably still have differences in opinion and different objectives, but these are dealt with far more professionally”.

North London Gas Alliance

East Coalition

Utility Street Works Seminar 2011 Les Guest was a key speaker at this year’s SBGI/ ENA (Energy Networks Association) annual one-day Street Works seminar, which took place on February 24. The event attracted capacity audience of nearly 120 delegates to the Institute of Civil Engineers, One Great George Street, London.

The seminar serves as an annual industry update to all those involved in Street Works from utility companies, along with contractors, Highways and Local Authorities, Government, trade bodies and other stakeholders. With prospective lane rental charges in the Capital moving ever nearer, mounting overstay charges, and Olympics 2012 on the horizon, the climate for critical utility infrastructure maintenance, repair and replacement in urban environments has never been more challenging.

Richard Buckley, Deputy Director, Traffic Management, for the Department for Transport, gave the keynote address which reviewed the coalition’s view on Street Works Policy. In a refreshingly honest admission by a Government spokesperson, Richard said that as yet there had not been much progress and very few decisions had been taken by the coalition. What he could report was a very different policy method to come.

He said the coalition were taking a creative approach and wanted to be very different to what had been before. Big society, Richard felt, would play a central role for people and professionals and the core themes of localism and decentralisation will see Street Works policy being made at a local service level and with a local authority lead.

He reported a large shift in culture in the corridors of Whitehall and indicated that central Government would take a “step backwards” to enable local action and local solutions to local problems.

SBGI is grateful to all the speakers for providing input into this year’s event, to Chairman, David Jones, for his usual flair and skilled chairmanship and to the event sponsors – National Grid, Skanska, Morrison Utility Services, Balfour Beatty Utility Solutions and Intelligent Trench.

The Seminar was supported by a lively exhibition including the event sponsors and DHL Supply Chain, Vac-Ex, Synthotec Special Products, DevelopTraining and Adien.

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> Richard Buckley, Deputy Director, Traffic Management, Department for Transport,

www.utility-business.org “You simply can’t fill those shoes” Les says. “John Murphy would have been great at whatever he did, at any point in time.

I am delighted with the appointment and feel very privileged to be in the position I am in”.

Les works with the iconic image of John Murphy framed on the wall behind him at the North London head office “I sometimes feel he is watching over me” Les shared with obvious admiration and respect for the founder (who was better known as ‘The Boss’).

And what a business John Murphy built. With over 3000 employees), international operations and a £420 million turnover the company is a large modern day success story which is still family owned and run fostering strong family values. Les acknowledges that maintaining this unique culture against the backdrop of rapid industry change is one of his greatest challenges. “One of the fundamental pillars of Murphy’s success is the company’s values. Murphy’s looks after its people. Health and safety is paramount, along with training and development and all our equipment is owned and maintained by the company. Investing in our own people and resources delivers value to our company and to our customers. It’s a very important part of who we are”.

Les recalled the first time he worked with Murphy, as a graduate trainee in 1980, at North Thames Gas Board and the last time, when he awarded a contract to KMI in 2001 as MD of United Utilities. He had no hesitation in taking the Chairman’s role when it came about. Les has an astute understanding of the utilities sector and his CV brings a wealth of experience to Murphy, having worked with many contractors over the last 30 years. He is a chartered Gas, Electricity and Water Engineer, was MD of United Utilities, more recently CEO of Southern Water and in the late 1990’s was responsible for all of Transco’s Distribution Networks. In addition, Les is exPresident of the Institute of Gas Engineers and Managers.

“I am still very much at the understanding stage in this role” he says. “There’s a good reason why Murphy has been operating successfully for 60 years and my approach is to fully understand the business. You should never judge anything, first try and understand it. Once you understand you can perhaps offer a different perspective”.

Les feels he brings complementary skills to the “excellent team” at Murphy’s, headed up by Managing Director John Stack.

“It is interesting”, he says, “Looking through the pipe from the opposite direction but many of the pressures of the utility transpose onto the contractor so the experience is pretty similar. The demands are the same, just further down the process, and it’s tough. To be a survivor in any market place you have to be creative, innovative, have good work ethics, good training and development and Murphy has this built into

UTILITY STREET WORKS SEMINAR 2011 // LEADING VOICE

In the first of a new series of interviews with senior industry figures, Utility Business talks to Les Dawson.

LEADING VOICE

Les Dawson, new Chairman for J. Murphy & Sons Limited, is often asked how he finds the challenge of stepping into the shoes of the late John Murphy, founder 60 years ago, of J Murphy and Sons.

its heritage. One of the biggest challenges for the business is cultivating innovation in order to save money and create more value. The industry is highly competitive, there is economic uncertainty, challenging sustainability targets and a changing agenda but Murphy are not fearful of this. It’s not a new challenge facing the business. We have to respond to the market conditions and make sure we deliver”.

And there are certainly opportunities. “Renewables, Carbon Capture and Storage, Nuclear. Murphy is well positioned to take advantage of all of these. Tough conditions are also where the best innovation comes from but it has to come from within and be built into the business”.

Les feels the skills challenge is worrying for the economy but seems confident that Murphy is tackling the issue appropriately.

“Murphy has a longstanding apprentice and graduate scheme and a commitment to training, development and investment in people. It’s important that this capability is within the business”.

He admitted there is a desirability problem with how the industry is viewed by school leavers and a lot of shorttermism – a job for life is no longer the desire it once was but Utilities have to adapt to this.

Les feels there is a real challenge for the utility regulators too in encouraging more innovation. He welcomes the introduction of Ofgem’s RIIO Framework and sees longer periods of regulation as timely, in light of climate change, and good for the industry.

“It will help create more certainty for the marketplace, more effective investment and will allow utilities to procure in a more effective way”.

But as the Cave review of water showed, despite some innovation in the water industry more could have been achieved. Ofwat is moving in the right direction but there is still the need for greater competition, Les feels.

As current President of the Pipeline Industries Guild, Les has a keen awareness of the modern day challenges facing trade bodies.

“Member participation is key and to achieve this you have to provide the right services. It’s about understanding what the member wants, having a strong focus and communicating in the right way. Membership of a trade body can be extremely valuable but in a time of tough economic constraints trade bodies, like any organisation, have to offer increasing value”.

Les feels some trade bodies need to be more connected with Government and far more assured, offering solid opinions and views. Going forward Les sees a potential generational issue because of the way young people communicate now through social media and the speed at which information becomes available. The trade body will have to change accordingly to accommodate this.

Utility Business is extremely grateful to Les for sparing the time for this interview. Thanks must also go to Paul Mallorie, Phillippa Hudson and others in the Murphy team who made this interview possible.

19

SBGI Utility Business Spring 2011

New Members Lightsout Computer Services Lightsout Computer Services has been dedicated to developing Corona, a mobile enterprise management system which is being widely adopted within the utilities, facilities management and construction industries. It provides a rapid return-on-investment for organisations, with field-based staff, which need to reduce running costs and increase capacity.

Corona has been known to deliver savings of up to £440,000 in its first year of use within a single organisation. It reduced one company’s street works fines from £75,000 to zero and lowered its HR requirements saving £250,000 within five months. Lightsout was delighted when Corona won the National Joint Utility Group (NJUG) Quality Award, won the Innovation Technology Bright Sparc Award, and was shortlisted in the Annual HSC (Highways Authorities and Utilities Committee) Awards and the National Business Awards.

The three-tier application, based around Oracle Database and Forms, operates on a central system that is linked to handheld devices for the field-based teams. Live information on every aspect of the organisation is available at all times enabling senior management to fully understand the process and view any part of the business within the same system.

The handheld devices allow the workforce to take digital photography combined with GPS and times and dates thereby reducing business risk and activating automated work management.

Corona enables real-time visibility of management information, dramatically reducing costs and improving information accuracy. It delivers measurable business benefits to organisations with complex business processes, ranging from 25 employees to councils and corporations. Corona eliminates elapsed time within internal supply chains and maximises revenue by increasing productivity and enabling well-informed decision making. It replaces slow and labour-intensive recording and reporting systems, which helps increase staff morale and improve communications between field workers, office staff and senior management.

Large enough to scale, small enough to care

Lightsout’s forward-thinking founders were amongst the first to adapt IT outsourcing services to suit smaller budgets and it is the only company to launch this type of groundworks industry software.

Lightsout delivers expertise tailored to your organisation’s core requirements, which often include cost management, improving quality of service, rapidly changing business demands and risk management.

Contact us

To speak to an expert, please call 08450 55 44 55 or email: admin@lightsout.co.uk www.lightsout.co.uk

Cripps Sears Established in 1973, Cripps Sears & Partners provides international executive search services to clients in the energy and infrastructure sectors and to their professional and financial advisers.

throughout all segments of the national and international oil, gas and power sectors.

Since its inception, the company has developed an exceptional network of contacts and first class experience of delivering recruitment solutions

Call Mark Scollay on +44 (0) 207 440 78999 or email: mscollay@crippssears.com

Contact us

Pipeline Technology Ltd. Pipeline Technology Ltd. is a leading UK manufacturer of Underpressure Drilling & Tapping, Drilling Machines, FlowStop equipment and Pipeline Tooling and Equipment for the Gas Industry around the World.

Technology continually broadening its scope of supply. This includes owning the rights to, and being the exclusive manufacturer of the Pass, Periquip and Talbot range of Drilling and Drilling & Tapping Machines.

Pipeline Technology has an extensive network of Distributors throughout the UK. This network is able to provide excellent service levels by maintaining local stocks, whilst maintaining the high level of technical support that Pipeline Technology is renowned for. Internationally, Pipeline Technology also has a presence in more than 100 countries.

In addition to the Underpressure Drilling & Tapping Machines, Drilling Machines, FlowStop and Bagging Off equipment, Pipeline Technology also offers an extensive range of Gas Test equipment, including Service and Mains Test Standpipes, Gauges and Relief Valves, ManoFlex U Gauges, Purge Hoses and Flame Traps, Telescopic and Fixed length Vent Pipes and the Torando Ground Gas Extraction equipment.

Pipeline Technology’s manufacturing infrastructure ensures that the Company is always in a position to react promptly to the everyday requirements of its Customers and to any urgent product need. Pipeline Technology has extensive research and development capabilities, which enables fast turn-round of new products.

The driving forces behind Pipeline Technology are service and quality.

Working within an ISO9000 framework, Pipeline Technology and its network of Distributors ensures that customers can always access Market-leading products quickly and easily and be reassured that full service and support facilities are readily available.

The Pipeline Technology Management team has many decades experience working in the Gas Industry. This experience has contributed to Pipeline

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Pipeline Technology also has an extensive range of General Pipe Tools, including Pipe Cutting equipment for PE and Metallic Pipes, Squeeze-Off Tools, PE Pipe Shims and Bevelling Tools, Cleaning Straps, Scrapers and Measuring equipment and many other Hand Tools for Pipeline maintenance, service and repair.

Contact us

Martin J. Topps, Sales & Marketing Director Pipeline Technology Ltd. 6 Albany Business Centre, Wickham Road, Fareham, PO17 5BD Tel: +44 (0) 7879 085988, email: martin.topps@pipetech.co.uk www.pipetech.co.uk

G4S Utility Services Founded in 1996, we are a leading national provider of technical and non technical metering services, and have a significant capability to provide high volume data collection and management to both the private and public sector.

We are a fully accredited meter operator and meter asset manager, and are authorised to operate in all network areas.

Our national workforce of multi skilled field operatives are trained to the highest standards and are able to provide gas and electric meter installations as well as maintenance activity and other associated services.

The collection, handling and management of data is a fundamental product of the services we provide, and we have developed proprietary systems to remotely retrieve data from smart meters, process it and supply it directly to our customers.

We also have the expertise to configure devices either on-site or remotely, and provide added value photographic solutions where required.

Our capabilities in Smart Metering are underlined by our excellent credentials, having won major contracts through competitive tender processes to install Smart Metering devices nationally for a range of customers.

We have the experience and expertise required to be the industry leader in Smart Metering. We are also the largest provider of meter reading services in the UK, collecting 40 million readings from 53 million site visits, per annum.

All data which we collect is stored on our highly trusted and reliable IT systems and underpinned by our disaster recovery plan to BS25999 standard.

Our range of services is complimented by our customer contact centre, which manages thousands of telephone calls from and books thousands of appointments for consumers on a monthly basis, as well as providing support for our field operations.

We are dedicated to quality assurance and are accreditated to ISO9001, ISO14001 & ISO18001 as minimum. We also have a strong commitment to adding real value for our customers to deliver year on year improvements to maintain a cost effective and efficient service.

Contact us

Michelle Wright Tel: 0191 201 3533 Email sales.info@uk.g4s.com or visit our website www.g4s.uk.com/utilityservices

GAS STORAGE OPERATORS GROUP

NETWORK ENGINEERING GROUP

BGE Ltd (Bord Gais) Centrica Storage Cheshire Cavity Storage Group Ltd EDF Trading Gas Storage Limited Eni Uk Ltd E.ON Gas Storage UK Ltd Gateway Storage (Stag) Halite Energy Group INEOS Enterprises Ltd Infrastrata Scottish Power Gas Trans. Hatfield Ltd SSE Hornsea Ltd Star Energy Group plc Statoil Storengy WINGAS Storage UK Ltd

Fulcrum Future Energy Group 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 Bureau Veritas

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 Pipeline Technology Ltd PLCS Limited Radius Systems Ltd Sarco Stopper Limited Syddal Engineering Limited Synthotech Special Products Limited Technolog Limited Talis (was Tyco)

DATA & COMMUNICATIONS MANAGEMENT Alcatel Lucent Arqiva ELEXON Ferranti Computer Systems Hewlett-Packard Ltd Logica UK Ltd Sensus Conservation Solutions Serck Controls

NETWORK ENGINEERING GROUP GL Noble Denton AMEC Group Limited Balfour Beatty Utility Solutions Carillion Utility Services Clancy Docwra Limited Enterprise plc

www.utility-business.org

NEW MEMBERS // MEMBER DIRECTORY // FORTHCOMING EVENTS

Member Directory

METERING SERVICES GROUP EDF Energy Customer Field Services E.ON Energy Services G4S Utility Services Ltd Lowri Beck Services Ltd OnStream Providor Pulse 24 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 BG Group plc ByBox Capita Symonds Ltd CEVA Logistics Limited CNG Services Ltd Cripps Sears Develop Training Ltd DHL Supply Chain Engage Consulting Enzen Global Ltd Generis Technology Ltd Gerald Eve LLP Gtc Jonathan Lee Kingsley Plastics Ltd Lightsout Computer Services Ltd Rhead Group Ltd Street Work Solutions Turner & Townsend Wilcock Consulting Wood Group Pressure Control Ltd Xoserve

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SBGI Utility Business Spring 2011

Viewpoint The Inconvenient Truth about Electric Vehicles Politicians and press are extolling the virtues of the electric vehicles (EV’s) that are coming to market in 2011 and the Government provides a subsidy of £5,000 per car. It is said that EV’s solve both the air quality and global warming issues. Well there is no doubt they are very good for local air quality, but what about reducing CO2 emissions?

First, let’s consider what an EV is actually replacing. Whilst EVs are often claimed by their supporters to replace ‘average’ cars (such as a Ford Mondeo, with CO2 of 140 g/km), in reality the 6 EVs on the grant register are cars in the same class as the following: Golf diesel 99 g/km Ford Focus diesel 99 g/km

Toyota Prius 89g/km CO2 Astra diesel 104 g/km

So, for the Nissan Leaf class, let’s assume an average CO2 of 100 g/km on a ‘tail-pipe’ basis. This needs to be increased by 15% to give an overall Well to Wheel emissions of 115 g/km Now let’s look at the Nissan Leaf EV. According to the US EPA (UK figures are not available on the official UK website www.vcacarfueldata.org.uk), it has electricity consumption of 34 kWh per 100 miles or 0.21 kWh per km.

The minimum electricity demand in a year is during summer night-time, at approximately 23 GW. Nuclear and wind generation can currently produce a maximum output of 14 GW at any one time. This means that the net extra electricity used to charge an EV from the grid will be generated by burning coal or gas at least until 2020. A.D. Hawkes* produced a detailed analysis of the Marginal Emissions Factors for CO2 emitted from electricity. His 2016 central estimate is 600 g/kWh, however, if the emissions in respect of the production and transportation of the gas and coal are taken into account this increases to around 660 g/kWh. In addition, around 6% of electricity is lost in transmission and distribution so that the figure becomes 700 g/kWh at the EV charging point. So, on that basis the Leaf emissions in the UK are 0.21 X 700 = 147 g of CO2 per km.

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Furthermore, the range of an EV is limited to short journeys, making the use of a second vehicle necessary to travel greater distances. In contrast, the Golf, Astra and Focus can be used for all journey types. Given that the EV owner’s second car is unlikely to be as efficient as the Golf, this puts the EV even further behind.

It is manifestly clear from the above calculations that the new generation of EVs are not the best option in terms of CO2 emissions in the UK if they use grid electricity. Whether they become less bad, is dependent on nuclear, offshore wind and coal/gas with CCS. The likelihood of these projects going ahead depends on an increase in the world carbon price to enable the UK to finance these projects. It also depends on natural gas prices, which are significantly linked to the cost of shale gas production.

This is discussed in the CNG Services submission to the Energy and Climate Change Committee inquiry into Shale gas which makes the case that dual fuel 75% compressed natural gas – 25% diesel trucks should be encouraged: http://www.publications.parliament.uk/pa/cm201011/cmselect/cmenergy/ writev/shale/sg17.htm It may be that the abundance of shale gas means that EVs should go the route of the Nimrod and be broken up for scrap before they are used. Maybe in 20 years we can look at them again if we have low CO2 electricity, though the target set by the internal combustion engine will also be much lower due to the advances we are seeing now that manufacturers are focussing on efficiency. This new scrappage scheme would avoid all the extra CO2 emissions by the EVs in the next decade or so.

But it gets worse. When it is cold, the EV uses a significant proportion of energy for the heater, whereas a diesel has ‘free’ heating from the engine cooling system. This is not taken into account in the official CO2/km figures but means that the Leaf EV is now causing a 50% increase in emissions of CO2 compared to its low emission peers.

My final point is that if I bought an EV and received a £5,000 subsidy from the UK Government I would be both ashamed and embarrassed. Ashamed because I would be taking money from taxpayers that should be invested in something that actually reduces, not increases, CO2 emissions, such as insulating a house with solid walls.

One of the reasons the EV is so poor is the weight. At 1,521 kg the Leaf weighs 207 kg more than the Golf diesel, equivalent to having two 16 stone rugby players in the back. It takes a lot of energy to drive rugby players around.

Embarrassed because I would be sending a message that I do not understand where energy comes from and have been taken in by ‘zero emissions’ nonsense. Oh dear.

www.utility-business.org

VIEWPOINT

SBGI Events 2011 Gas Industry Awards 2011

10 May 2011 Hilton Park Lane, London This prestigious annual industry awards includes a drinks reception and lunch. The opening address and awards will be given by Charles Hendry MP, Minister of State, Energy & Climate Change.

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Utility Regulation Seminar

9 June 2011 Royal College of Obstetricians & Gynaecologists, London The seventh annual seminar in the series reviews how RIIO is shaping up – will it deliver the levels of investment and innovation needed in the energy transmission and gas distribution sectors? In the water sector, the event will look at how the Gray Review of Ofwat might lead to major changes in regulation, competition and mergers. The conference will address what these and other developments will mean for the shareholders / owners of the utilities and their ability to deliver the returns and investment necessary to develop future utility networks.

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Utility Asset Management Seminar 19 July 2011 Holywell Park, Loughborough

Now in its third year, this seminar will bring together senior decision makers in the energy and utilities sector including government, regulators, network asset management companies, and services providers, to debate the current and future challenges in the industry and to share best practice approaches. The programme will contain a wide range of experience and the event format will provide excellent networking opportunities.

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Utility Metering Seminar

14 September 2011 National Motorcycle Museum Over the last 3 years around 600 delegates have attended SBGI’s Utility Metering event, an indication of the value of this event in the utility calendar. This year’s programme will address policy and strategic objectives and gather stakeholder opinion from across the supply chain and data and communications providers. As usual the seminar will be supported by a highly informative and topical exhibition showcasing latest technologies and solutions for smart metering.

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Gas 2011

13 October 2011 Holywell Park, Loughborough The Utility Networks’ team is pleased to be working again with the Institution of Gas Engineers & Managers on this high profile annual seminar. Gas 2011 will bring together senior decision makers to debate current and future challenges to the Gas industry with a stimulating programme of distinguished speakers in prospect. The event will follow the usual formula, providing full exhibition and excellent networking opportunities.

For further details and booking: www.sbgi.org.uk Event contact: Vanessa Webster vanessa@sbgi.org.uk 01926 513763

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