Utility Week

UTILITY WEEK | MARCH 2021 | 25 Policy & Regulation While the water sector remained trans xed by the drama of the CMA appeals, the unexpected announce- ment came out of Ofwat in late January that chief exec- utive Rachel Fletcher was to leave the regulator to take up a new role at energy market disruptor Octopus. In the a ermath of the announcement, we asked industry sources what it meant for the regulator and who the likely candidates to succeed Fletcher are. The outgoing CEO, who joined the regulator in 2018 a er 15 years at Ofgem, was described as a "breath of fresh air in terms for her vision" by one commentator, who added that it was a shame she will not be there longer to further embed her philosophy. Fletcher has achieved a lot, from championing social purpose in business to making companies accountable to billpayers. She pulled together regu- latory bodies to form the RAPID alliance, which one commentator described as "a stroke of genius", and launched the sector's rst regulated innovation fund. She will be returning to a familiar patch, albeit in a completely di' erent role and at a company that has done a lot to reshape the image of the traditional energy supplier. Announcing her appointment, Octopus Energy chief executive Greg Jackson described an early meeting with Fletcher at a roundtable where energy companies were waxing lyrical about how they were putting consumers rst. Fletcher bluntly retorted: "I don't believe you." This no-nonsense approach and the gravitas she brings to a company that is keen to be seen as more than a disruptor clearly piqued Jackson's interest. Commentators agreed that it seems unlikely any single issue would have prompted Fletcher's deci- sion, instead suggesting the nature of regulatory cycles leaves a fairly small window for change. "There are better and worse times to go and this is not a bad point," one said. Ofwat will have to regroup quickly to avoid disruption to PR24. One commenta- tor said that with the CMA appeal having already proved a drag on preparations there is a good chance the next price control will look similar to the current one. There is the added complication that chair Jonson Cox is also due to step down in Octo- ber. This has inevitably led to speculation as to whether the appointment process will be put on hold until a new chair is in place. Or could Cox be tempted to extend his tenure once again to ensure stability? David Black being named interim chief executive means there is a steady hand at the tiller in the meantime. He has been instrumental throughout PR19 and the subsequent appeals, so-no one could know the building blocks for the next price control better. Where does Fletcher's exit leave Ofwat? Runners and riders Thoughts now turn to a long-term successor to Fletcher. One observer suggested Mary Starks could throw her name into the hat. Passed over for Jonathan Brearley for the chief executive role at Ofgem, Starks le the regulator for a consultancy role. If she were still keen to lead a regulatory body this could tempt her. Paul Smith, who is currently director of consumers and markets at the Civil Aviation Authority, has worked in energy, utilities and nancial services competition, regulation and policy development. One analyst sug- gested he would make an appealing candidate, but the civil service o' ers lower salaries than CAA. Hannah Nixon was a frontrunner for the role in 2017 when she was managing director of the Payment Systems Regulator. She has since joined Thames' board as a non-executive. Black will assume the interim role for the coming business year from April and he seems the obvious internal candidate for the permanent position. One insider described him as a relative traditionalist who rmly believes in economic principles – but that may not always match the complexities of the real world. It is understood that Black was in the running for the top job in 2018. If he were to be passed over again, would he be willing to stay on? One commentator sug- gested this would be a real concern to Ofwat, and could potentially be even more problematic than Fletcher's departure. Aileen Armstrong, the regulator's senior director of nance and governance, or John Russell, its strat- egy director, may be considered, but Black would have the edge as a source of continuity through the price control period. Whoever takes on the role will do so at a signi cant time for the water sector, with tough challenges ahead and a changing landscape for UK utilities regulation. Octopus gains heavy hitter Over at Octopus, Fletcher's arrival as director of regulation and economics has been described as heralding "a change in energy". The supplier's chief executive, Greg Jackson, told Utility Week Fletcher had a "great combination" of a deep knowledge of energy, intellectual rigour and the gravitas to be able to talk about how the sector can be reformed to speed up decarbonisation. He added: "Historically energy companies were low on imagination – they were just trying to get the most out of the system as it stood. The energy company of the future is helping rede- ne the system the way that Amazon reinvented retail, the way that Tesla reinvented cars and now we need to reinvent energy in the sameƒway." AJ

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