Utility Week

UTILITY WEEK | 6TH - 12TH MARCH 2020 | 7 Interview P rofessor Dieter Helm CBE, the author of the Cost of Energy Review and a persistent critic of the current structure of the utilities sector, begins by saying: "If you look at the criticisms that have appeared in Utility Week over the years to my proposals, it's a catalogue of vested interests. A lot of companies are very worried about what I've suggested. But they can't ignore the fact that the overall model has run its course. It's over." But he believes opinion is mounting on his side of the argument. The upcoming energy white paper, he says, will "pave the way" for many of the recommendations in his review, which has been gathering dust for more than two years now. Chief among them is his insistence that the electricity system operator should be nationalised and a series of regional system operators introduced. Helm also believes Ofwat's handling of the latest price control process for the water sector, along with lingering suspicion fostered by the nationalisation debate, has shown up failings in this industry. Again, he believes a systems regulation model is the answer – proposing the creation of a series of catchment system operators (CSOs) based on the original regional authority areas. He argues that the net zero journey highlights how unfit for purpose the current system is and suggests that a form of nationalisation will occur quite naturally across the sector as the financing landscape changes. Seeking solutions We meet in the tranquil setting of his Oxford chambers, where Helm discusses his absolute conviction that the new government will see the sense of his radical ideas. If he is right, what does this mean for the utilities sector as we know it? This is a question that was much discussed in the autumn of 2017 when Helm produced his review, which branded current policy, regulation and market design as "not fit for purpose". As well as the need for system operators, the review called for a unified equivalent firm power (EFP) auction to replace current mechanisms such as contracts for difference and the capacity market. Helm also argued for the merging of licences for generation, supply and distribution; universal carbon taxes across the economy and a border carbon price; and the scrapping of standard variable tariffs. At the time there were criticisms that Helm had devi- ated fairly liberally from his initial brief and shoehorned in a number of his personal convictions about shaking up the sector. However, he insists it all comes back to the customer and the burden they are expected to shoulder. "The question of the prices that customers should pay across utilities is deeply political. And that's because there are whole swathes of the population who just cannot afford to pay any more. "So, how are you going to pay for net zero and the goals within the Environment Bill and everything else that needs to happen?" Helm suggests socialising the cost of much of this investment – effectively taking it off consumer bills and into the government's account. He is confident that Boris Johnson's administration will see the sense in this and that many of his ideas will feature in some shape or form in the energy white paper, expected at the end of this month. Helm expects that paper to just be the starting point for a series of big policy announcements around energy. He says: "I think it will be a continual process – it will be like health under the Labour government, where we had a bill a year."

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