Google Angela Knight. You’ll quickly discover, if you didn’t already know, that the chief executive of Energy UK since last summer was formerly famous (or should that be infamous?) for her position at the helm of the British Bankers’ Association during the most torrid five years of its existence. A regular sparring partner with John Humphreys on Radio 4’s Today programme, she earned a name as a doughty fighter and the soubriquet “Queen of the Indefensible” from the Daily Mail when she made the switch from banking to utilities.
She’s also immensely charming, as quickly becomes clear when she meets Utility Week on a chilly winter morning to lay out her plans for 2013, and more than a match for any hostile politician, regulator or attack-dog journalist. Top of her agenda is seeing the Energy Bill through Parliament and beginning to rebuild trust between utilities and the public.
But first things first. Utility Week is ten minutes early and Knight is answering emails with one hand while slipping into her jacket and heels, ready for the photographer, and wolfing down a Pret a Manger lunch in the seconds to spare. She’s not fazed, though – “come in, come in,” she waves. Shall we come back later? “Not at all! As long as you don’t mind me eating…” She’s ready for all comers, is Knight, with an old-school self confidence that speaks of her years of training as a Tory MP in the House of Commons. It’s this same training that enables her to glide past unwelcome questions without a flicker, but more of that later.
Knight decided to leave the BBA after “five years – and probably the hardest five years in the past 200,” she says. “Clearly, when I took that job it was recognised that it was going to be a tough and difficult one, but nobody anticipated the collapse of the financial system around the world.” She pauses, thoughtfully taking a spoonful of soup. “There comes a point where change is a very good thing.”
Indeed – but some might say that Knight’s move was a classic case of out of the frying pan, into the fire. After all, utilities are already pretty high on the public’s hate-list, and with politicians weighing in and further price rises in store, the vilification is only going to get worse. Did that cross Knight’s mind? “I saw it as a move from one industry that’s important to all our lives to another industry that’s important to all our lives,” she replies, with the merest hint of reproof. “I think that amongst the very important issues that we need to find a way of discussing properly are that large industries and important industries are actually a plus for us as a country.”
Fair enough. So, in taking the job, what did she hope to achieve? “The first thing was to bring the industry together by bringing the trade associations together,” she says, referring to the merger between the Association of Electricity Producers, the Energy Retail Association and the UK Business Council for Sustainable Energy.
“Then you have around the table the large companies and the small companies – those that are vertically integrated, and those that are just generation, or just supply. If we can first of all create the organisation, we can then secondly build the community, which then thirdly gives a coherent and clear industry voice and sorts out some of the difficult issues that have previously been fought out in the public domain or with the authorities. We can sort them out internally.” The last is a crucial point, and goes some way to explaining why Knight has been relatively quiet since taking post. Her negotiations are going on behind the scenes.
The second point on Knight’s agenda chimes with that of every chief executive of the big six: trust. “That trust agenda is important almost wherever you sit within that broad framework. While people will always put their hand up and say, ‘we’re generation, we’re not retail’, nevertheless people’s views tend to be informed by what they receive, and at the moment, that is the household bill. That is against companies, we have to recognise that.
“At the same time, there’s this great, great ambition and path that the UK is moving on to a much more diverse and much more plural generation market, and to explain and engage with that so people actually understand and see and grasp that the importance of making ourselves more energy secure by having a greater degree of control and energy production in our own house, all the jobs that can create as well, often in difficult communities, I see as twinned with the trust agenda.” She stops for breath and grins, casting aside an empty pineapple and mango pot. “And now that’s the fruit course.”
Six months into the job, have there been any surprises? “Quite a few,” she says. Notably, “that it is simply a black and white debate. Do you want to pay a bill, do you not want to pay a bill. Do you think it should have risen by 2 per cent, do you not think it should have risen by 2 per cent. I am surprised that there is so little about that written and it’s done so simplistically.”
Why is that? “It is complicated, but you don’t have to distil it down to just yes or no, you can get more reflective and more rich than that. At the same time, the energy policy of this country seems to be one that has kind of passed the public by.”
Politicians, don’t help, do they? Knight passes up the opportunity to lay some punches. “Let’s look at it from the politician’s view,” she says. “They spent a long time getting to the point they got to just before Christmas, with legislation which, once in place, will provide a framework to affect the major changes to come. So I absolutely see why that has been where their concentration lies. At the same time, they haven’t had people walking through their doors and saying, ‘we want more jobs in the energy industry’. What they have had is people walking through the doors saying, ‘my household bill has gone up’.”
But the prime minister’s headline-grabbing intervention in tariff reform was particularly unhelpful, wasn’t it? She’s not playing ball. “I’ve spent some time in politics, and sometimes the political driver is the political driver,” she says. And in true politician’s style, Knight seamlessly segues into a lengthy answer to a question that wasn’t asked, about public support for wind turbines.
A few minutes later, and the interview’s back on course with the question, will the Energy Bill put the conditions in place to bring forward investment? The answer nods to the crucial details still to be sorted out: “We think it will do. I can’t say it has yet, because we haven’t yet been through the political process… the nature of the debate has been such that seeing the Bill through into the conclusion of its legislative process is essential.”
Where are the sticking points? “Ultimately the crucial area will tend to sit around the contracts for difference. That’s the financial mechanism that gives to investors the certainty that they will get a return for their investment. Second is the decision on the capacity mechanism, because that provides the mechanism whereby generators will be available to meet what will be increasing intermittency requirements. The third aspect that’s worth flagging is the transition piece, the grandfathering, as we move from the existing Renewables Obligation to contracts for difference. That needs to be done in a way that doesn’t cause a hiatus in investment, and means the small as well as the larger renewables projects continue to have a route to market.”
What could go wrong? Here Knight is willing to be a bit more openly critical of political intervention: “One of the things that keeps me awake at night is the same thing the investors have said to us, and that is political uncertainty. Are we going to have a real, clear direction for the industry or will it be subject to too much intervention? That does concern me. I don’t think that has been laid to rest yet.
“The second thing that worries me is the law of unintended consequences. You’ve got so many moving parts – emissions requirements and constraints, carbon price floors, Renewables Obligation Certificates, contracts for difference, feed-in tariffs, offshore wind and very far offshore wind, big projects underway, timetables that can’t shift, capacity mechanisms. There are an awful lot of things on the move there, and the unintended consequence is something where every decision taken is logical, clear, coherent, but put together gives you a result that you did not intend.”
She adds: “We’re also very conscious that as an industry, we’ve got to cool the temperature a bit”. Jibes like the Daily Mail’s Queen of the Indefensible don’t help – what did she make of that? “Firstly, I did not see that comment and that is probably as well,” she says, with more than a touch of frost. Then, quickly warming to her theme: “I don’t see that the energy industry is indefensible. I don’t think power stations are indefensible. I don’t see that moving from and upgrading our generation is indefensible. I don’t think it’s indefensible that we want to bring more generators into the market and more retailers into the market. I don’t think that it is indefensible that prices have to rise and bills have to rise, and especially in an industry that is governed to a significant extent by what is happening in world markets, which is outside our control. So the labelling is something that does worry me, and I think it is a pity that labelling is done and I hope that we can move to a more educated and rounded discussion.”
She lives up to the formidable reputation: the utilities industry is engaged in a desperate battle for political support and public opinion, and having Angela Knight lead the charge is a promising first step.
This article first appeared in Utility Week’s print edition of 1st March 2013.
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