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10 | 10TH - 16TH JULY 2015 | UTILITY WEEK Interview Manweb was quickly cast as the dog, thanks to its small size and challenging geography (rural Snowdonia coupled with inner city Liverpool). Roberts and his team weren't afraid to take advan- tage of this reputation, and have a chuckle along the way: "At the time, going to Liverpool was, for bankers, like going to a foreign country – like going to Kosovo. We had two tours of Liverpool – the A tour and the B tour. The A tour went down leafy roads, beautiful Victorian villas, and that's where we took all the prospective investors. The B tour went round the docks, round Toxteth and inner city Liverpool. That was the one where we took all the government people who were going to set the prices. We were going round Tox- teth with these guys and I said, just for a laugh, we bet- ter lock the doors, because four white men with suits in a car are either rent collectors or the police – but we should be alright because it's early morning, they won't be out of bed yet.' It was fun." The tour must have worked, because Manweb came out with the highest price cap – RPI plus 2.5 per cent. Roberts shakes his head as he recalls a regime networks could only dream of today. "The government were des- perate to sell the industry and Mrs Thatcher was very keen about mass share ownership, and of course they wanted it to be a success, so they sold it at a discount so that when the voters invested, they made money." Thanks to its handsome price cap, Manweb floated at the biggest premium – £1.77 a share. "But still, there was apprehension in the business." A brave new world had dawned. "We had freedom to do what we liked – to go into manufacturing, to go into retail, and freedom to go into liquidation." Unlike many of his peers, Roberts, who subsequently became chief executive, chose not to opt for wild diversifica- tion. "Some companies went into all kinds of stuff. For my part, being in Manweb, I said 'we're going to get this right, we're not going to diversify into anything'." The strategy worked – until 1995, when the government's golden share option on the Recs expired and Manweb was subject to a hostile takeover by Scottish Power, even- tually becoming Scottish Power's distribution business, as it remains today. The staff still did well out of the flota- tion, with free shares and shares at a discount. "Despite the concern and the trepidation… they made money out of it, which was a good thing." Through negotiations with the unions, and in response to calls from a certain Tony Blair, then shadow secretary of state for energy, the workers got two gold- plated guarantees. The first was that there could be no changes to their defined benefit pensions without their explicit agreement – and individuals are still retiring on to these plans today. The second was around health and safety, with a national council set up to protect stand- ards. "Safety has just improved out of sight." Within a few years, the 12 Recs had transformed into something more recognisable as today's market, as the supply businesses were sold and the network arms were subsumed into larger groups. "Some of the wilder diver- sifications bit the dust, inevitably, and the industry came to be more in its present shape. I don't think anybody in the early days foresaw for one minute what was going to happen." Roberts is convinced that, for customers, it all worked out for the best. Today's grievances with cus- tomer service are well known, but those of yesteryear are sometimes forgotten: "As a nationalised industry, we organised ourselves from the inside out. We did things the way we wanted to do them, and if you didn't like that as a customer, that was just too bad. You'd ring up on a Wednesday aernoon and say, 'your electricity is going off '. Not 'is it alright?', just 'that's it'." The outcome for government was more problematic. The politicians of the time believed they had washed their hands of the electricity industry. When asked what the government's energy policy was in the 1990s, Nigel Lawson famously replied that the government had no energy policy, beyond what the market dictated. What policymakers had forgotten was that private companies had no incentive to deliver policy objectives – something that soon became clear when their contracts for coal- generated power ran out. Eventually, Manweb was arm- twisted into signing a new contract to support the Coal Board, but not without protest. "Whether it penetrated the Whitehall mind or not, that was the first demonstra- tion of the fact that you can't tell industry what to do. Of course now, as we can see, of the big six, four are owned by foreign owners… The supply margin is getting very, very thin and the difference now compared to where we were in the 1970s is that the people making investment decisions are sitting in boardrooms in Madrid, or Paris, or Frankfurt, not sitting in Whitehall. That is something that the government, in all of those 25 years, hasn't sorted out." Perhaps unsurprisingly, Roberts sees further change in the future. He predicts a shi in thinking around demand-side management – "there's some interesting issues around the economics of electricity supply which frankly I don't think have ever been bottomed out" – plus seismic changes in retail, hence his involvement with First Utility. "If you'd said to me in 1990, people will sell electricity on computers, it would have been beyond imagination. When you think about it, energy is the per- fect product to sell on the web. An electron is an elec- tron. It's not like selling clothes or even books. There's nothing tangible and the delivery mechanism is there. I think eventually the vast majority of energy will be sold on the web. It may well be sold by businesses other than the ones who are there now – the natural service provid- ers, the people who understand e-commerce." The scale of change on the retail side makes the past 25 years seems more like 250, says Roberts. "But in the distribution business, it feels like just five years. The technology has improved a lot, but people are still basi- cally doing the same things." The asset-heavy businesses of transmission and generation have also remained largely stable. The most disruptive change, for networks and for other areas of the business, notably generation, has been the growing focus on climate change. "The whole green thing – nobody even thought about that, about carbon or climate change, other than one or two rather unortho- dox scientists. We were worried about conservation and energy efficiency purely from the point of view of the price of energy and energy dependency, because we had the oil price shocks in the 1970s and all of that. Nobody was thinking about climate change." It's been a quarter of a century since the energy mar- ket was privatised, but the battles continue – and will, for the foreseeable future. Roberts, now chairing both a supply and network business, is in a privileged position, able to apply the lessons of yesterday to the challenges of today. And, clearly, he still loves the energy business. "I don't think anybody in the early days foresaw for one minute what was going to happen"