UTILITY WEEK | FEBRUARY 2021 |
11
Interview
O
fgem's role in helping the UK reach its 2050 net
zero goal has been central to Jonathan Brearley's
strategy as chief executive since day one.
His tenure began in February 2020 with the launch of
an action plan "to help make low-cost decarbonisation a
reality". However, over the subsequent 11 months he has
been dogged by the criticism that this was more rhetoric
than reality.
Following the July publication of the dra… determina-
tions for the RIIO2 price controls for gas and transmis-
sion networks, as well as the electricity system operator,
Brearley was accused of having "flunked" his first test as
chief executive and being out of step with the govern-
ment's zeal to "build back better".
The squeeze on returns, the disallowance of vast
chunks of proposed expenditure and the preference for
uncertainty mechanisms over anticipatory investment
were all cited as examples of Ofgem failing to deliver on
warm words about climate change.
The second half of 2020 saw persistent calls from
industry leaders for government to step in and clarify
Ofgem's duties on to net zero and how these co-exist
with its principal objective – to protect customers.
Utility Week spoke to Brearley a…er publication of the
regulator's final determinations, in which that squeeze
on returns was relaxed slightly and much of the funding
withheld in the summer approved, on the back of more
than 20,000 pages of supplementary evidence. There was
also further evidence as to how the net zero reopeners –
expected to account for £10 billion of investment over the
five-year period – will be triggered and administered.
Company reaction has, at the time of writing, been
fairly muted, although several insiders expressed the
view off the record that Ofgem's U-turns in several areas
simply showed up errors made in dra… determinations.
Brearley retorts: "Companies need to bear in mind
they are not asking for money from Ofgem but from
customers.
"You need to stand behind your plan and ask
yourself would I be happy to sign this off on behalf of
customers. As we made clear in the summer, we simply
didn't feel that was the case.
"What we did see, which was fantastic, is a stepping
up of all companies. Although that's a huge volume for
us to go through, it le… us in a much stronger position at
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