Utility Week

UTILITY Week 2nd December 2016

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10 | 2ND - 8TH DECEMBER 2016 | UTILITY WEEK Interview Slade before retailer GB Energy Supply went out of business – see p4]. At the same time, this could further dampen engagement and switching, as consumers stick to what they know. Slade is not concerned about the impact, saying "it comes under the heading of 'it's a competitive market'" and having faith in the recently beefed up supplier of last resort pro- tocols of the regulator. These will now be put to the test as Ofgem now has to find homes for 160,000 former GB Energy Supply customers. He is concerned about the impact of volatile wholesale price though, especially as the latest round of price rises begin to bite. "The thing that wor- ries me is the transparency around how energy bills are made up and making sure as much as is possible there is an understanding of what's driving energy prices. "We've suffered as a sector in the past and we need a conversation around what the bill is, what's driving price rises, how they feed through to customers and the differ- ent models. I do think that's a crucial part in establishing higher levels of trust in the industry. "It's important to the customer that as an indus- try, with the government and the regulator we are clear what's driving those price rises." Another key plank in building trust and increasing customer engagement will be the deployment of smart meters across more than 30 million domestic properties in the UK. However, the £11 billion rollout programme has already been beset by delays, with two-thirds of the Data and Communication Company (DCC) network finally going live, with the northern region stiff waiting to be switched on. True to form, Slade strips away the hysteria around the subject, and tries to coolly assess the situation and chart a course for the industry. "I think as an industry was obviously disappointed by the delay and at this stage of proceedings delays don't help. We've got to be very sensible about this now. It's not a case of picking fights, we've got to understand how we get to and over the next hurdle." Despite this, he acknowledges the importance of the coming months for the sector and the programme. "There is no getting away from it that the next 2 quarters are absolutely critical. That's an unavoidable fact." What should not be done, in his opinion, is for the rollout programme to be changed. At least not yet. Oppo- sition MPs, most notably Labour's shadow energy minis- ter Alan Whitehead, have called for a pause to the rollout to allow for a to review its timescales, feasibility and implementation. Continuity and stability is Slade's preferred option. "Let's get the next two quarters out the way, let's see how much progress we've made in that time, let's see if we've got SMETS2 coming through and on the wall, let's see when the next releases are planned for, let's get more transparency in DCC processes and faith in their decision making, then we can look at the broader issues. "The biggest call is for everyone to take a pragmatic approach to this. It's obvious how important it is to the future of the industry and its clear we need to get this done, but let's be sensible about this." He also dismisses any idea that, with the freedom that Brexit will grant the UK, that the smart meter target, of offering all households a smart meter by 2020 could be changed or missed as a "red herring". "I don't think that should come into it. If you look at what smart is going to bring to the industry, that in many respects is a good enough reason to be doing it anyway." In the wake of the year's political shi, which saw the UK vote to leave the EU, David Cameron resigning as prime minister and Theresa May seeing off her fellow challeng- ers to take the top job, and the creation of a new Conservative government, there are worries within the sector that the May gov- ernment is all-to-eager to intervene in the market. In her party conference speech, May set out her intention to help customers "stuck on the most expensive tariffs" – a sentiment echoed by business and energy secretary Greg Clark when he said: "Knowing that £2 billion of detriment exists, we have to act on this in the next few weeks and months." This action, if and when it comes from government, would be the wrong move, according the Slade. The key thing is for the government to allow the industry to implement the CMA's remedies, and for them to bed in and have the opportunity to take effect. "We've had two years of the CMA with tens of millions of pounds spent on the investigation and I think really we need to draw a bit of a breath, deliver on the rem- edies and actually get those working before we look at any other interventions. The best result for everyone is a market that works for everyone. "That means we all have to build on the successes that we have had. There is a heck of a lot of work ongo- ing on delivering these. Let's deliver it then judge it." Slade is keen for Energy UK to be the voice of the energy sector. It has more than 90 members, but Ofgem senior partner for consumers and competition Rachel Fletcher has questioned whether it is "sufficiently resourced and empowered" to meet the needs of the industry in the changing regulatory landscape. Slade jokes that he "could say thank you very much for her recruitment drive," before addressing the point more seriously and of his pride at the diverse nature of the trade association. Slade adds that the role for Energy UK is set to increase as Ofgem moves towards a more principles based regulatory approach, and the trade association and the industry must be willing to step up into that role. "We know, unfortunately, cross industry things do crop up. In a principles-based regulatory world, industry will have to look at these things more oen and I think we have a duty and responsibility to make sure we're dealing with these issues in the most effective manner." He goes on to say that, while a number of smaller energy companies are not members of Energy UK, its doors are "open to everyone" and he hopes to see more new members soon. Slade's positive tone, combined with a calm sense of realism is infectious, and a valuable asset given the sig- nificant challenges the sector faces. With the threat of political intervention growing, the impact that Brexit will have – and is already having – on the sector, having a calming influence at the top of the sector is more impor- tant than ever. Energy UK's members will expect Slade to be the fig- urehead during the potentially turbulent months ahead, and beyond that as the new government seeks to make its mark in the sector. It will take more than a calm demeanour to meet this expectation with aplomb. "We need a conversation around what the bill is, what's driving price rises, how they feed through to customers, and the different models. That's a crucial part in establishing higher levels of trust"

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