Civil servants have indicated a willingness to share data on vulnerable customers with the utilities sector, Ofgem’s chief executive told Utility Week Live.
Jonathan Brearley was addressing the slow progress in sharing such data across the industry to date. He welcomed recent moves by electricity and water companies to bring the dream of a shared priority services register (PSR) closer to reality but said real progress would only come from better interaction with government and councils.
Officials from the Department for Work and Pensions have told Brearley there is a data system set up “that is accessible and is something we can potentially work with”, he said. He added: “I’m genuinely optimistic that we can go from what has been quite an incremental set of changes to something that is more fundamental.”
The need for data sharing with government was also stressed in another Utility Week Live panel session on Tuesday (16 May) by So Energy’s head of regulation, Paul Fuller.
Referring to the need for targeted bill support for vulnerable customers, Fuller said the data to accurately identify those customers “does exist and it is within HMRC datasets”. He said a substantial amount of work was needed to cleanse and re-organise the data but added: “If we can do it, we can unlock a whole new world of targeting, not just for a social tariff but also around energy efficiency programmes.”
Brearley also talked about the need for a social tariff, reiterating his support for the idea to be explored but insisting it was vital poorer customers were not excluded from tariff competition as it re-emerges into the market.
He said: “Vulnerability is a very diverse description and the assumption that somehow vulnerable customers won’t want to be flexible, that they won’t want to access the best deals, is wrong. I’d like to see a social tariff done in a way that allows vulnerable customers to get all the benefits of this new system.”
Asked whether it was possible to get targeted bill support in place for next year, he said: “Ultimately it is the department for energy that needs to make the decision but I’m optimistic that if we want to get there we can. I would point out that we negotiated the Energy Price Guarantee within three or four weeks.”
Retailer profits
In his speech to Utility Week Live, Brearley also touched on the financial resilience of energy retail saying after years of losses, he expected energy retailers to return to profit this year, partly because the price cap includes some payments for costs incurred last year.
Asked if a return to profitability could attract political pressure, Brearley said: “In a world where the real price of energy has quadrupled and the price customers pay has more than doubled, you cannot expect this not to be a time of politics in energy.
“What we have been clear about, and government has been clear about, is that reasonable profits are the only way we are going to get a sector that is resilient.
“As long as we are experiencing reasonable profits and protecting the overall customer interest, the regulator will stand behind the fact that retailers need to make reasonable profits if we’re going to avoid what happened in 2021 and indeed if we are going to build the path to net zero.”
Open to change
In a wide-ranging speech, Brearley also addressed the wider debate about the future of regulation, including calls for Ofgem to be given an explicit net-zero duty.
He said: “Our view, led by Ofgem’s board, has long been that our statutory duty, to protect the interests of current and future consumers and to ensure the sustainable development of sector, has meant putting the goals of a net zero electricity system and decarbonisation at the heart of virtually every decision we make.
“However, we can certainly see the benefit of clarifying that responsibility, and are open to change.
“We will be working closely with government and stakeholders in Parliament to consider if and how a net-zero mandate could usefully be applied.”
Similarly, he said he was open to the idea of Ofgem having some form of growth duty, highlighting that “regulators have a pivotal role in supporting economic growth”.
Connections amnesty a ‘small step’
The Ofgem boss also pushed an “invest and connect” approach to unblocking the backlog to access the grid in his address.
Asked about the response to National Grid ESO’s transmission entry capacity (TEC) amnesty, which saw expressions of interest from 8GW of projects, he said: “All of us when discussing the TEC amnesty were asking ourselves the question of how much it would actually do. And it has done a bit.
“It’s a small first step but it shows that unless we get into the heart of this – which is reorganising that queue and saying sensitively to projects that aren’t going to make it, you need to go back or come out of the queue – I don’t think we’ll make a fundamental difference.
“We’re doing everything we can. The ESO is working very hard on this. But if we don’t get the progress we need, we’re going to have to change the regulations and possibly the law around this.”