Utility Week

UTILITY Week 1st September 2017

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16 | 1ST - 7TH SEPTEMBER 2017 | UTILITY WEEK Policy & Regulation Analysis T he Sunday Telegraph recently ran a story tipping the frontrunners for Cathryn Ross's replacement at Ofwat as David Black, a senior director at Ofwat, Hannah Nixon from the Financial Conduct Authority, and Richard Moriarty from the Civil Aviation Authority. Industry sources have confirmed the three are likely contenders – but say others fit the profile too. There are potential can- didates in equally senior positions at other regulators or related bodies, for example Alan Sutherland, chief executive of Wics – admittedly a long-shot, but a possibility nonetheless. Equally, there are well-qualified peo- ple who have alternated between regula- tors and companies, and are currently on the company side. However, the pay drop they would face if moving back into regula- tion would likely be too great to incentivise such a move. Ross's replacement is likely to receive a salary of £200-250,000 a year, against a circa £500,000 enjoyed by some company directors. One market participant tells Utility Week that although some senior executives from water companies may try for the role, they would have to offload shares – an offputting prospect. Equally, it is unlikely Ofwat would have both a chief executive and chair from the water industry at the same time, so those from other regulators, or possibly even an energy company, are considered more likely contenders. Ross, who is stepping down at the end of the year to pursue a career as head of regu- latory affairs at telecoms giant BT, is well- respected in the water sector. The new chief executive comes into the organisation at an important time, and market sources have suggested history may repeat itself. When Ross took up her role, the approach to the price review was already set and she made it clear that she would not interfere with the framework. Although the timing is slightly different, the same thing may happen again. Ross has confirmed she will finalise the rules for PR19 before leav- ing. This creates an interesting dynamic and challenge in attracting and recruiting a new chief executive who will already have the plan and rules set for the next five years. Utility Week rounds up the frontrunners and the outliers who could be the next to head up the water regulator. Ofwat's next CEO? Three strong candidates have emerged as the frontrunners to succeed Ofwat chief executive Cathryn Ross, but there are others who could also steal the crown, industry players tell Utility Week. Richard Moriarty, group director of consumer and markets, CAA Moriarty re-joined the Civil Aviation Authority (CAA) in January 2016 as group direc- tor of consumers and markets, and deputy chief execu- tive. He is responsible for the CAA's economic regulation, competition, consumer protec- tion and consumer enforcement activity. Before joining the CAA, Moriarty was chief executive of the Legal Services Board – which oversees the regulation of the legal profession in England and Wales. He has also held senior public and private sec- tor roles in a number of regulated sectors including director of regulation at Affin- ity Water and director of policy and market development at the Social Housing Regula- tor (the TSA). David Black, senior director of Water 2020, Ofwat Black joined Ofwat in July 2012. He is currently leading the regulator's Water 2020 pro- gramme – cov- ering wholesale markets and design of PR19. He has extensive knowledge of the water sector, having been a member of the 2014 price review delivery board, and led the finance and modelling workstreams for PR14. Black is also an experienced economist. Prior to joining Ofwat, he held a number of roles in economic consulting – advising on issues such as access and wholesale regula- tion and pricing, cost-benefit analysis, verti- cal integration and the cost of capital. Before he began consulting, he was an economist at Oel and the New Zealand Treasury and New Zealand Commerce Commission. Hannah Nixon, managing director, Payment Systems Regulator Nixon is managing director of the payment systems regulator, which was formed by the Financial Conduct Authority in 2015. She may not have experience in the water sector, however she was formerly a senior director at energy regulator Ofgem – where she led on the development and implemen- tation of the RIIO framework. Before Ofgem she was head of regulatory economics at the Office of Rail Regulation, a senior consultant and founding member of the Cambridge Economic Policy Associates – which provides economic and financial consultancy services – and a vice president of Deutsche Bank's global markets econom- ics team. The frontrunners

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