Ofgem has not yet “figured out” how best to deliver the flexible regulation needed keep up with the accelerating pace of change in the power sector.
The regulator may want to take lessons from the commercial world in becoming more agile and adaptable, according Ofgem senior partner for networks Jonathan Brearley.
“If I was to go back say ten years, we had very long term consultative processes that would last years to get to an answer that we thought would be embedded and would last forever,” he said. “I don’t think we’re in that world now.”
Brearley spoke at the launch of the second phase of the Future Power System Architecture (FPSA) programme, which highlighted the extent and speed of the transformation which the power sector is undergoing. The programme identified the rigid regulatory framework as a key barrier to delivering the right kind of change.
“We are all going to have to be adaptive as this change occurs and I think that probably means – although we haven’t figured out the how yet – us as Ofgem becoming more adaptable to the changing world and responding more quickly.” He said this could mean “trying things that aren’t perfect”.
Brearley, who was a key archiect of the Electricty Market Reform agenda while at the Department for Energy and Climate Change, has recently returned to the public sector following a stint running his own consultancy firm.
With this experience in mind, Brearley said Ofgem should consider copying the way private sector firms often operate.
“If I was to characterise the commercial world versus the public policy world,” he said. “In the public policy world, you take ages to design something but you really want to get it right and then you launch it.”
He continued: “Commercially – I see this a lot – people just set something up and get it going and adapt it as they go along, and if it doesn’t work they close it down and move on to something else.”
Craig Lucas, director of science and innovation for climate and energy at the Department for Business, Energy and Industrial Strategy (BEIS), agreed on the need for flexible regulation.
“The policy challenge for us… is to recognise what we don’t know and create a policy and regulatory framework which is agile enough to deal with that and also to helps to us to horizon scan, particularly what the most disruptive technologies might look like in terms of how we not just make policy but also operate the system.”