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UTILITY WEEK | 15TH - 21ST SEPTEMBER 2017 | 7 Interview C an you let us know the top three areas you want to talk about?" asks the Ofgem press office a few days before Utility Week's interview with the energy reg- ulator's chief executive, Dermot Nolan. Not really, is the answer, because with a list of topics for discussion that includes – take a deep breath – Ofgem's new strategy; the smart, flexible, energy systems paper; the potential price cap; the smart meter rollout; the targeted charg- ing review (TCR); and the open letter kicking off work on RIIO2, it's difficult to choose just three. And so the full list remains in place as Utility Week heads to Ofgem's offices on Millbank, where Nolan is in an uncompromising mood. Always affable, there's little time for chitchat today as he outlines a vision of energy transition that will see innovation disrupt the market, companies change shape and throughout it all, consum- ers protected by the regulator. Nolan isn't shying away from the changes ahead, and drops tantalising hints that they could be even bigger than currently envisaged, if time runs out for the retail market to prove itself capa- ble of competition, and the evolving role of distribution system operators forces system operator-style business separation. He's ready to do battle – in the courts if nec- essary – and determined that as UK energy undergoes a once-in-a-generation transformation, the regulator will be leading the way. Nolan has been in post for nearly four years and is well respected throughout the industry. Thoughtful and engaging, he has kept a lower profile than his prede- cessor, Alistair Buchanan, but when he does choose to speak out, he speaks his mind. His messages today are clear and, before the questions start, he takes a moment to set out his overview of the market: "The sense of tran- sition in the energy sector is very, very considerable – perhaps greater than it's been for many years. At the risk of using a cliché, there will be challenges and opportu- nities, but by and large one of the key functions of the regulator over the next few years will be to try and make sure that those innovations that take place really benefit consumers." "The scale of change is such," he says intently, "that if we get it right we will have an energy system that will be lower cost, secure, and will protect us all." But, he warns, "the scope for getting things wrong is huge". With those words still ringing, it's on to the first order of business: the vexed energy retail market, and the possible price cap. Nolan has made clear his belief that a market-wide price cap is a matter for ministers – and with MP John Penrose leading the campaign, it seems increasingly likely they will act. In the meantime, Ofgem is expected to consult later this month on a more limited measure, an extension of the current price cap for pre- payment customers to all vulnerable customers. Can Nolan reconcile such an intervention with a belief (his own, presumably, and Ofgem's) in competi- tive markets? "I think it's perfectly reconcilable," he says, suggesting that a number of regulators, like Ofgem, "try and bring competition where possible and regulate where that is not the case". He reiterates that the energy retail market is not work- ing as well as anyone would like, and says: "The reason we're thinking about a vulnerability price cap… is, one, the evidence has suggested to us that such customers are getting particularly bad experiences in the market in terms of their ability to engage with it. Second, we have statutory duties which specifically require us to protect such customers." If competition is desirable only where it can work effectively, and it is not working effectively in the energy retail market, that begs the questions: is it the right solu- tion for that market? "I think broadly yes," says Nolan. "But I think it has to prove itself, and one of the tests for the next couple of years is seeing whether or not compe- tition can deliver." How will that be seen? Nolan cites switching figures, ease of switching, cost differentials between the cheapest and most expensive tariffs on the market, and envisages a situation a few years hence where consumers could switch energy suppliers to save, say, £80 a year, at the touch of a few buttons on a mobile phone. If that doesn't come about, he warns rather ominously that "other measures would be necessary". He won't go into the detail, but says that if engagement doesn't improve "then I think we would very much need to be open to other ideas". Energy suppliers will be anxious to hear, in due course, what those "other ideas" might be. For the moment, though, there's plenty of immedi- ate challenges to keep them occupied – not least the smart meter rollout – and a 2020 deadline many think unachievable. Does Nolan see a problem? "I don't think so… all I can say is that we will take enforcement seriously and enforce in a way that we think best serves consum- ers' interest." He refuses to be drawn on what form this enforcement action may take, saying only that it will be "