Letter from the Editor: Questions to answer in the seat of power

Certainly, that must be what business secretary Greg Clark thought when he proposed Professor Martin Cave to lead the regulator through one of the biggest shake-ups for energy bills this winter.

But could it really be that straightforward, even for a highly experienced regulatory economist whose specialist subject is competition law?

While he’d gain support from some quarters for bolstering Ofgem’s stance with suppliers, he’d face some tricky rounds himself after taking over from David Gray – someone generally well thought of by the industry.

And what might be the three toughest questions Cave could face after sliding into the top seat?

The first must surely be how to maintain institutional knowledge levels and continuity when Gray finally walks out of the doors at Canary Wharf, following some other big recent Ofgem departures. His strong networks background will be particularly missed during the RIIO2 review.

The second would be how to answer any concerns about the change raised by the two different sides of the sector.
Those in networks will be hoping to see the reasonably apolitical regulation of monopolies continue, while those in supply and generation will ask what the political appointment could mean for them. As one industry source predicted: “Ofgem looks set to stay far more politically involved than it ever really should be.”

Yet dealing with the contradictory nature of government – which champions free markets until they create results that play poorly with voters – sounds like it could be an ongoing challenge for a Cave tenure.

The third big question must be how the regulator’s chief executive might react to his new boss. The relationship between Cave and Dermot Nolan would be key as Ofgem steps up to oversee the energy transition. Building that relationship, and understanding who does what – both in the public eye and out of it – would need to be at the top of Cave’s list.