It comes down to some simple principles that all good regulators do try to follow: have clear rules that businesses understand and know are not going to change.
Q. How important is the role of the regulator given the wider and political and economic uncertainty?
It’s crucial, but that’s always the case not just when we have the levels of political uncertainty that we see today. A business like National Grid is having to make decisions about our network that will come into effect many years in the future. Even in the most stable times, predicting what the political and economic environment will be in, say, 15 or 20 years times is incredibly difficult, so regulatory certainty will always matter.
Q. What will the impact of Brexit be on the sector?
It is hard to say, for National Grid we do feel it would be beneficial to have continued access to the Internal Energy Market as that has a benefit to consumers. But if that doesn’t happen the case for interconnectors would still remain strong.
Q. Should utilities fear wider state intervention and regulation? How realistic is nationalisation?
We shouldn’t fear all state intervention, in areas like electric vehicle infrastructure for example a degree of state intervention may be beneficial to help get the infrastructure in place to deliver the low-carbon future for transport we all want. Sensible intervention designed to deliver positive goals is a good and sometimes necessary thing.
As for nationalisation, the question about how realistic it is should be directed more at politicians, although it would inevitably be a lengthy and costly process. The important question is whether it would actually benefit consumers. We’re at a time of great change in the energy sector and the expertise of a company like National Grid has delivered reliable energy at low cost to bill payers, as well as managing that transformation. It’s not clear to me why a successful model like that should be changed.
Q. The Beast from the East and now the summer heatwave have provided very different challenges to UK utilities. What are you doing to ensure you are able to continue providing a resilient service?
This goes to the heart of what we do at National Grid and is probably our most important job. With the Beast From the East we faced an incredibly challenging set of circumstances and it’s important to recognise that the system worked – the market responded in the way that it should. But we have still looked at everything that happened that day to see what lessons can still be learned. Ultimately it’s about asset reliance and preparation.
As for the summer it’s part of an ongoing story around renewables and the changes in the generation mix, we try to look to the future and see where the trends are going and take advantage of how new technologies – such as solar – help us provide a reliable service at the lowest cost.
Q. How will this challenge change in the coming years, and what is being done to prepare for it?
The biggest changes are likely to come from the growth of new technologies and ways of using energy, not just renewable energy, but electric vehicles, storage, the electrification of heat and so on. At National Grid we publish our Future Energy Scenarios every year to help the industry understand all these challenges. We’re constantly looking at how the energy landscape is changing and planning for that.
You can hear more from Nicola Shaw on day two of this year’s Utility Week Congress, as she presents on customer-led efficiency.