Utility Week

UTILITY WEEK | 2ND - 8TH MARCH 2018 | 7 Interview R obert Symons is not your typical trade body chair- man. The chief executive of Western Power Dis- tribution is known for his outspoken style, his determined efficiency, and his relentless focus on the job in hand. Yet Symons recently took over the reins of net- works body the Energy Networks Association (ENA) from UK Power Networks boss Basil Scarsella and will be in the chair for the next two years. Today, as he sits down with Utility Week and ENA chief executive David Smith in London's Goring Hotel, he admits he had "reservations" about the chairmanship – but cheerfully acknowledges: "I always perform better when there's a problem. I've really enjoyed my first cou- ple of months at the centre of the storm – it's not so bor- ing as I thought!" So what's the problem? Well, first up there's the tide of negative publicity battering networks, the one-time public heroes, for their costs and profits. Then – some might say linked – there's the looming question of the mid-period reviews for the networks' regulatory settle- ment, RIIO, plus the negotiation of RIIO's second round, RIIO2. Last, and by no means least, there is the once-in- a-generation transition the entire energy system faces, and the question of networks' role in it. When Conservative MP John Penrose took to the floor of the House of Commons in January and launched a blistering attack on networks for being "fat and lazy", only to be lauded by energy secretary Greg Clark as "absolutely right", it was clear that something has changed forever for energy networks. Once seldom noticed outside of a storm or other major event, networks are now firmly centre stage in the public debate about energy costs. Penrose's intervention comes on the back of a flurry of reports attacking network costs and profits – reports that have been eagerly taken up in parts of the national press, with the Sun's "Griddy Guts" a particu- larly memorable headline from last year. What's gone wrong? Symons is characteristically forthright in his response: "Supply businesses have taken a good deal of flak for increased prices, so I believe that attention has now been focused on networks, and when you think about that you have to recognise the fact that networks have actually reduced costs in real terms since privatisation by about 17 per cent, and that's against a background of investment increasing 55 per cent year on year." Symons has a pointed message for British Gas and parent company Centrica, which have been at the fore- front of criticising network returns, going so far as to refer the RIIO-ED1 settlement to the Competition and Markets Authority in 2015. He says: "A lot of our criticism emanates from British Gas/Centrica. They proudly say they can maintain your electric boiler and heating sys- tem for 47p a day. For 23p a day you're getting your elec- tricity distribution system, and for 10.3p a day you get the transmission system. When we start talking about value for money and think about the 55 per cent improvement in investment, 17 per cent reduction in costs since priva- tisation, let's have some sense of perspective." All this must be taken in the context of the energy transition, as Symons and Smith are keen to point out. Networks' role in that transition has come under ques- tion in recent months, as some market observers ques- tion whether these monopoly businesses are best placed to deliver the transformational change required. Profes- sor Dieter Helm, for example, in his government-commis- sioned review of the cost of energy, suggests networks should be replaced by independent regional system operators – separate bodies to those owning and oper- ating the transmission and distribution assets. While this proposal has gained little traction to date, there are questions being asked at the highest level about whether networks are the right bodies to act as regional system operators in a more dynamic energy system. Meanwhile, their ability to fully participate in emerging markets for flexibility was dealt a body blow with Ofgem's ruling last year that networks cannot directly own or operate stor- age assets. Symons has a robust answer: "Okay, if you want someone else to do it, who is it? Who's sat there ready to do the job? If we didn't have a history of already doing it, I could see the point of chucking all the balls in the air, but in such a dynamic situation surely you rely on those people with a record of doing it in the past, but also stim- ulate them and incentivise them to actually perform." Incentivising networks is a particularly thorny issue at the moment. Much of the public ire is aimed at the level of returns they are making under the current regu- latory regime, which critics say overestimated the cost of capital, allowing networks and their investors to benefit

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