Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/735063
8 | 7TH - 13TH OCTOBER 2016 | UTILITY WEEK Interview off. "I'm still the new boy on the block. But with my background [in competitive sectors] you'd expect me to be asking those questions I would think." Funding structures aside, picking up the pace of energy system innovation is certainly something that many would welcome. But with so many interdependent facets of sys- tem transformation to dabble in, it would be easy for an uncoordinated increase in pace to add little to overall progress. For Emery, the key area of focus that should ensure accelerated innovation also has pertinent direction, is around "the envelope for the distribution system opera- tor". This reinvention of distribution networks as local system operators with balancing powers and other National Grid-type roles in their regional license area is a key pivot for debate in the power industry today and something that Emery is discreetly excited about. "If you believe in a decentralised approach – which is becoming conventional wisdom – then you need to be able to manage networks locally," he says, in a matter of fact fashion. The government's call for evidence in its consulta- tion on smart energy systems is overdue. It will canvass industry opinion on what the DSO's role should look like – among a range of other issues including removing bar- riers to the deployment of energy storage and enabling demand-side markets. Our conversation having turned toward government, Utility Week issues the now obligatory questions about the perceived impact of Brexit and early impressions of the new government – especially our new Department for Business Energy and Industrial Strategy. On the former, Emery is relatively sanguine. He admits the Leave vote was not something which had been expected or thoroughly prepared for at ENW, but aer an initial moment of shock, the company quickly mustered resources to inspect the fallout. Emery emphasises that this was not about formu- lating knee-jerk reactions to "ultra-short term" conse- quences of the vote. Rather, minds went to work on the plotting the potential long-term effects in three main areas: national and regional economic dynamism and the effect of a slowdown on ENW's connections busi- ness; inflation, which is "a big driver" for DNOs; and exchange rates. Overall though, Emery says "we don't see Brexit as a threat to our business" – something that has been com- municated to the workforce and investors with equal care. Of marginally more concern is the departmental re- organisation, specifically the demise of Decc. Emery is cautiously optimistic that the creation of the new Depart- ment for Business, Energy and Industrial Strategy will play out as a true merger of Decc and the Department for Business, Innovation and Skills, not a "takeover" – but he does worry that "any change is a platform to shi position" and this would be an unwelcome knock to con- fidence in policy direction. Reverting from national and macroeconomic chat to the nitty-gritty of internal business, Utility Week asks Emery what he's keen to change or develop in ENW, now that his feet are comfortably under the top desk. Emery says he's hardly a veteran yet, and that it's still "early to judge" both the business and the industry. He's also quick to list the many ways in which ENW is already performing well, he returns to innovation, adding that ENW is one of the highest-ranking DNOs for reliability. It's also the operator that has delivered the biggest price reductions against Ofgem's expectations in the current regulatory period. It outstripped its commitment to deliver an 18 per cent reduction in year one of RIIO-ED1 for example, delivering 21 per cent. Across the price control as a whole, it expects to reduce costs by 15 per cent. With these successes recognised however, Emery comes on to the room for improvement. Primarily, this is in the area of customer service and satisfaction. Despite ENW's reliability, it has struggled to score highly against Ofgem's Broad Measure of Customer Sat- isfaction for DNOs. Emery explains: "If there is a fault or an interaction, the measure assesses how well you inter- act with the customer. This DNO… it's a weakness. We need to interact with the customer more effectively. Ironi- cally, because we are one of the most reliable DNOS, we get fewer breakdowns and fewer fault interactions with customers. But that is not a measure of our customer ser- vice in as far as it's measured by the regulator." Working on this performance area will not be a chore. Emery says staff are "relishing" a broader trend towards increased interaction between DNOs and end users. "We need to improve that interface, not just to supply electric- ity but to deliver innovation into the future," he says. Unsurprisingly, the other thing at the top of Emery's to-do list for ENW is preparation for the coming winter. Storms Desmond and Eva, which hit the UK in Decem- ber 2015, did not treat ENW kindly. Tens of thousands of homes lost power during Storm Desmond alone and power restoration was complicated by flooding and the loss of communications. ENW's response to the crisis was widely praised at the time. The network went above and beyond to care for customers, handing out 25,000 hot meals and working around the clock to get supplies back on line. Emery says staff are "rightly" proud of their work last winter, but "there are quite a lot of issues that come out of it". There is data to be studied on areas of particular vulnerability and associated strategic asset protection. But equally areas bordering those vulnerable regions need resilience studies – storms don't hit in the same way every time. Emery is confident this work will be effective, but at the same time, is quick to criticise the historical approach to setting resilience investment allowances. "One of the challenges we have in this regulated sec- tor is that we have to convince the government of the merit of our investment cases and obviously the govern- ment will look to other sources to verify our claims," he observes. High on the list of these independent experts is the Environment Agency, which provides flood risk fore- casts. Emery says last winter clearly demonstrated that the approach taken to compiling these risk assessments over the past ten years has been "inadequate". "That's not good news for us because we are having to revisit capital investment schemes that were put in place to address these issue. It's not good for our custom- ers either because everybody thought that we were on top of this and it looks like we're not." It's a gloomy thought for a new boy with, perhaps, the clouds of his first big challenge in the job gathering on the horizon. But Emery says he's enjoying getting to know a very different part of the energy "value chain" than the ones he encountered in his previous roles. And it's clearly true – perhaps not least because he's finding there is a good deal he can challenge. "If you believe in a decentralised approach, then you need to be able to manage networks locally" Low Carbon Networks & Innovations Conference From 11-13 October, Electricity North West will host the Low Carbon Networks and Innovations Conference in Manchester. The event is the UK's primary event for dissemination of findings from projects funded under the Network Innovation Allowance and the Network Innovation Competition.