Ofgem chief executive Dermot Nolan has warned that there will be losers from its overhaul of network charging arrangements.
The regulator intends to come up with a new set of rules around how people access and pay for the grid, due in part to the number of people now avoiding charges, leaving others to pay a higher tab.
Nolan told Aurora’s Spring Forum on Tuesday that the regulator will publish some charging proposals by late summer or early autumn.
“I expect those proposals to be regarded with interest by a large number of [market] participants, some of whom will like them, some will not,” said Nolan.
He added that the review, “almost by nature, will be contentious”.
Speaking on a panel alongside UK Power Reserve CEO Tim Emrich, a vocal critic of Ofgem’s decision to slash Triad benefit, Nolan said the regulator had to make difficult decisions in the interest of consumers.
“Questions of fairness will come up [during the charging review]. They are unavoidable for a regulator in what almost by definition will be a contentious process, in which every different person is saying, ‘no me, I’m the guy, I’m the innovator’.
“So we will have to make judgements that are extremely difficult,” said Nolan, adding that the regulator was nevertheless “looking forward” to the process.
Nolan also rejected claims by Emrich that Ofgem was underpowered and led by large market incumbents that he claimed “control” the industry code panels.
“They don’t give Dermot and his team a lot of options,” Emrich suggested.
Nolan said he did “not feel the regulator is under-resourced on issues relating to charges at all” and was “dismayed at the view larger companies are doing our thinking for us.” He pointed to the recent challenge to its decision on transmission charging by SSE and EDF, which was last month dismissed by the Competition and Markets Authority way of example.
The panel had discussed fostering innovation within the energy industry, but Nolan also warned that some who “perceive themselves as innovators will fail.”
“Some will flourish, some will wither; we should expect that,” said Nolan.
“The point is, do you have a rule book that is sufficiently flexible to allow those that are going to flourish to do so?”
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