Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/856348
UTILITY WEEK | 4TH - 10TH AUGUST 2017 | 7 Interview F or Chris Train, the boss of Cadent, the past couple of years have been busy to say the least. In November 2015, the then chief executive of National Grid, Steve Holliday, made the surprise announcement that the energy behemoth was looking to sell off its valuable gas distribution division. A year and a half of tense sales talks and negotiations ensued, with the businesses finally sold to a consortium of investors, the Quad Gas Group, in a deal valuing it at £13.8 billion in March 2017. Having previously served as the director for gas distribution at National Grid, Train has been pro- pelled into the spotlight as the new firm's chief execu- tive, giving him his first experience of life at the very top. Speaking to Utility Week in a small meeting room at one of Cadent's main offices in Coventry, Train is cheery and relaxed. Sitting with his back to the window, he leans back in his chair and slightly to one side, shiing forward when a topic piques his interest. In one of his first interviews in his new role, Train is keen to set out the future of Cadent, his thoughts on the row around net- work profits, and his belief that gas will remain central to the UK's energy supply for decades to come. It's been a big summer for networks. Regulation has come under increased scrutiny aer Citizens Advice released a report claiming that they are on course to pocket £7.5 billion in "unjustified profits" because their RIIO allowances are too high. At the same time, Ofgem published a letter outlining its intentions for the second period of the RIIO price controls, in which it vowed to "get tougher" on network costs. Cadent is forecast to achieve the lowest underspend of any of the gas distribution networks (GDNs) during RIIO GD-1, but this still equates to almost 9 per cent of the total allowance – or £721 million – of which the com- pany will be entitled to keep nearly two-thirds. Unsurprisingly, Train doesn't agree with Citizens Advice's analysis, saying: "I'm not sure how and where the numbers come from. I don't think that's truly representative." It "doesn't feel right" to judge RIIO GD-1 halfway through, he says. "It negates all of the value that has been delivered to customers to achieve those outcomes." He is happier with the Ofgem letter. There were "no surprises" and it covered "all of the issues that we're already engaged with the regulator in discussing". Overall, he feels that the incentive-based RIIO frame- work has been "a great step forward" in regulation: "Coming back into distribution a couple of years ago, I think I was absolutely surprised by the focus on the delivery of outputs that the RIIO regime creates." Photo: Joe D Miles/ImageCapture