Utility Week

UTILITY WEEK | 11TH - 17TH OCTOBER 2019 | 9 Policy & Regulation Jonathan Brearley is not the new CEO that Ofgem set out looking for. But he could be just the ticket for helping the regulator square up to its undeniably big challenges. W hen the regulator's current chief executive, Dermot Nolan, con- firmed his intention to step down in February next year, a brief was created to recruit a new leader in a new mould. The application pack asked for an "experienced commercial and entrepreneurial leader with an innate ability to be a champion for the consumer". Notably, it did not ask for an experienced economic regulator with deep technical knowledge of the system – and yet this is what Brearley undoubtedly is. Acknowledging this, it might be easy to assume a number of things. First, you might conclude that the Ofgem board simply choked when it came to the crunch of appointing a chief executive in a very different style to either Nolan or Ofgem chair Martin Cave. Brearley is no carbon copy of these two Ofgem leaders, but he is an economist extraordinaire with a cut to his jib that says tough – combative when necessary – regu- lator all over. Second, and possibly uncharitably, you might assume that Ofgem was overambi- tious in targeting an entrepreneurial go- getter given the salary on offer and simply failed to attract big-hitting competition to internal candidates. Linked to this, there is the possibil- ity that Ofgem's public profile and the unenviable responsibilities of a CEO caught between populist politics and the need to safeguard critical national infrastructure were unappetising for many. But let's take a step back. Brearley is no institutional shoo-in. He's not an Ofgem lifer but rather has experience in both the public and private sectors, making consider- able stamps on the utilities sector on both sides of the fence (see facing page). Those who have worked with him over the years describe him as a good listener and a "fair thinker". Brearley's personal commitment to tackling climate change should stand him in good stead as Ofgem responds to calls for a review of its remit in light of net zero targets. As director of systems and networks, Brearley also has detailed knowledge of the many critical projects in flight to adjust the way our energy systems and markets function – and this is no bad thing given the urgency with which new rules and frame- works for a decentralised, dynamic and low carbon energy system are needed. Brearley knows the detail of the targeted charging review (TCR), for example, inside out. And he understands the significance of this work to the evolution of our energy net- works, markets, and business models – as well as its implications for the way consum- ers and society shoulder the responsibility of decarbonisation. The lingering question for those in the industry who find Brearley's appointment a little disappointing is whether his closeness to projects like the TCR and RIIO2 will make him unable to raise his eyes above the detail and consider the need for a big change to the "fundamental genetics of the regulatory role" – as one industry source put it. Having had such an influential role in shaping Ofgem's current direction of travel for framework and market reforms, he will undoubtedly be strongly wedded to this trajectory and it will be harder for him to take on board the potential of a more radi- cal shake-up of the status quo. Another challenge for Brearley as he takes the helm at Ofgem will be stepping into the spotlight as the industry's front man for consumer protection. While he undoubtedly understands very clearly the big implications and potential risks to consumers and social equity that are inher- ent in the wide-ranging changes under way across our energy system, he has not previ- ously taken a lead role in communicating these on a very public stage. While his time working in government will mean he is no stranger to handling political hot potatoes, being the public face for these is quite a different demand. But for all the inevitable speculation about how Brearley's appointment came about and how well he will handle the responsibilities of his new role, there's no changing the fact the die is cast. Brearley will vacate his important role at the head of Ofgem's systems and networks division in February next year – or possi- bly sooner if Nolan decides that having an internal shadow for several months is too awkward – and pick up the reins at the top. His job will need filling – capable depu- ties like Akshay Kaul and Frances Warbur- ton could easily be in the frame – and he will assume a lot of responsibility for mak- ing or breaking the UK's shi— to a dynamic low carbon economy. As one industry source put it: "For better or worse, he's in now. Let's hope he does a good job. There's a lot riding on it." Jane Gray The new boss must find it in himself to take a step back Cave on Nolan "Dermot leaves Ofgem in a good position to tackle the challenges facing energy consum- ers during this time of transition." Martin Cave, chairman, Ofgem Cave on Brearley "Jonathan has impressed me with his wholehearted commit- ment to this aim. Our current network price control proposals for network companies, that he has led, are on track to play their full part in decarbonising the economy and to save consumers around £6 billion from 2021. "Jonathan's many years of experience in the energy industry and of climate change mean that he is also well placed to ensure that Ofgem plays a key role in delivering a net zero economy at the lowest cost to consumer." Martin Cave, chairman, Ofgem Comment

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