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The Decline and Fall of Britain’s Energy Regulator, Ofgem

February 5, 2020
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By Paul Homewood

 

An excoriating piece from John Constable about OFGEM’s new Decarbonisation Programme Action Plan:

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This confirms concerns that as a long-term Whitehall policy insider and responsible in part for both the Climate Change Act (2008) and Electricity Market Reform (EMR), Mr Brearley was not an appropriate choice to lead the regulator.

In October 2019, Ofgem, the UK regulator for the gas and electricity markets, announced that Jonathan Brearley, its own Executive Director for Systems and Networks, would be succeeding Dermot Nolan as Chief Executive, taking over at the end of February 2020.

Faced with such vast proposals for expenditure an objective regulator would require stringent cost benefit analysis and justification, but under Mr Brearley that not will happen

Mr Brearley’s Whitehall career is practically a history of modern British climate change policy. From 2002 to 2006 he served as “Head of Team” in Tony Blair’s Prime Minister’s Strategy Unit (PMSU). The PMSU was at least in part responsible for the Energy Review of 2002, and for The Energy Challenge study of June 2006, amongst other things (a full list of the PMSU publications and of those to which it contributed can be found on the National Archives site).

From July 2006 until September 2009 Mr Brearley worked as Director of the Office for Climate Change (OCC), an offshoot of the Department of Environment (DEFRA) that formed the administrative nexus drawing together six other departments for work on the Climate Change Act (2008).

This experience led to a further appointment in late 2008 in Gordon Brown’s new Department of Energy and Climate Change (DECC), where he became Director of Energy Strategy and Futures, and then Director of Electricity Markets and Networks. In this latter position he is said to have “led the delivery of the Governments’ Electricity Market Reform (EMR) programme”, the programme which introduced Contracts for Difference (CfD), the subsidy scheme introduced to replace the Renewables Obligation (RO).

Mr Brearley continued to serve under the Conservative/Liberal Democrat Coalition Government, but in 2013 he resigned visibly and dramatically from DECC, with the Independent newspaper reporting a source to the effect that Brearley was “not happy… DECC is working to improve the investment climate and the Treasury is stopping it”.

Full post here.

10 Comments
  1. February 5, 2020 10:28 am

    Another excellent analysis by John Constable.

    There is probably an unwritten law which states that “all independent regulators and committees are organisations whose main remit gradually changes to that of implementing government policy without examining the evidence or cost”.

  2. February 5, 2020 11:17 am

    Press release from GWPF:

    London, 5 February: The Global Warming Policy Forum is calling for a major reform of the UK’s energy regulator.

    Referring to Ofgem’s publication of its Decarbonisation Programme Action Plan on Monday, the GWPF notes that the regulator is to all appearances no longer bound by its original brief to protect the consumer. Instead it is now just one more UK institution committed to the delivery of climate mitigation policies, whatever the cost to energy consumers.

    According to an analysis by Dr John Constable, the GWPF’s Energy Editor, the new CEO of Ofgem, Mr Jonathan Brearley, is a long-term Whitehall policy insider, who has been closely involved in the creation of many of the UK’s climate policies the costs of which Ofgem should be scrutinising.

    Dr Constable said:

    “Mr Brearley was a very surprising choice to lead the energy regulator, and the publication of the Decarbonisation Programme Action Plan confirms fears that under his leadership Ofgem will do little or nothing to protect consumers against extreme climate policy costs.”

    “Households and businesses are now in effect deprived of an institutional champion and consequently find themselves without a voice in government. This is a deplorable and unacceptable situation.”

  3. Ian Cook permalink
    February 5, 2020 11:34 am

    I don’t get what Carbon has done wrong? Surely it is a superb material for making strong, yet lightweight cars and aeroplanes. Diamonds have always been popular before and I’m a tiny bit sure it is fairly important in the human body. But we should be ‘decarbonising our society’? Surely, there can’t be scientific inaccuracies in such an important document? It wasn’t an article for Private Eye was it?

  4. Pancho Plail permalink
    February 5, 2020 11:49 am

    In most businesses, when a new initiative is introduced, it is reviewed to see if it is actually achieving what it set out to do. Nowhere have I seen any analysis of the effect of the measures taken and the money “invested” (lining the pockets of supporters).
    Given the eight or more figure expenditure on measures so far, it would seem prudent to see if they were working before shovelling in more taxpayers’ money.
    Without even entering the debate on whether CO2 is the culprit or not, what has been the reduction in CO2 from what it would have been had the measures not been taken.
    Has anybody seen any such figures?

  5. Harry Passfield permalink
    February 5, 2020 11:49 am

    During my professional career we were always wary of project managers/team leaders who moved between posts far too regularly. We would often be right in thinking that they were being moved on to a place where they could do no damage or make no waves. In this case, one is left with the feeling that Brearley must have upset his teams along the way and got moved on. Unfortunately, to a position where he can do a lot of damage to the consumers he’s supposed to be championing.

  6. The Man at the Back permalink
    February 5, 2020 11:55 am

    The last two of your posts Paul mean we should revisit these 2 articles below-

    https://economics21.org/inconvenient-realities-new-energy-economy

    The red link at the head of this webpage leads to more detail and a downloadable pdf which is well worth a further study. The embedded video is also worth your time.

    Also

    Mark P. Mills has another call for sanity and realism in this article, which was flagged up at GWPF at the time.

    http://www.thegwpf.com/if-you-want-renewable-energy-get-ready-to-dig/

    unfortunately it is WSJ and the full article is behind a pay wall, but just this bit is sobering enough.

    I have passed these on to a number of friends to “educate” them. I think they are a great summary of the real world.

  7. Steve permalink
    February 5, 2020 12:47 pm

    This must be the best Dracula and blood bank story yet, with the added twist that the bank is legally required to bleed the patient. According to Energy News the competition for the job was organised by the civil service. This has to go to the top and May must have approved the appointment.

  8. Chaswarnertoo permalink
    February 5, 2020 1:26 pm

    Fanatacism is redoubling your efforts while losing sight of the objective…

  9. It doesn't add up... permalink
    February 6, 2020 12:11 am

    I recently commented elsewhere about OFGEM and its failure to regulate:

    It is easy to argue that many of the problems we have stem from their regulatory failures: the hash that is the retail market, the failure to bring forward new dispatchable capacity (part blame goes to the EU, but capacity mechanism prices don’t support newbuilds in part because of the rules on dispatch priority in the first place), and the complete Horlicks that is developing over price volatility and wholesale pricing, including negative prices. Meanwhile, the blackout actually revealed a whole lot more regulatory failure by OFGEM – inadequate standards for backup/spinning reserve, inadequate standards for admitting new generators onto the grid, inadequate standards enforcement on RoCoF protection of embedded generation, inadequate standards on metering embedded generation (so there was no clue about the effect of LFDD) and modelling of DNO networks. They’ve got all this on their plate:

    The actions relate to:
     System security:
    o reviewing the standards that the ESO is required to operate to for securing the electricity system against credible disruptive events;
    o improving the transparency of the processes the ESO uses for estimating requirements for back-up arrangements to replace power losses and for validating the performance of providers of back-up power;
    o improving the robustness of the processes for testing compliance of generators with a technical industry code, and the ESO’s approach to carrying out those processes and modelling the performance of complex generators.
     Distributed generation:
    o reviewing the timetable and scope of planned industry changes to the sensitivity of distributed generators’ protection settings to the impacts of network disturbances;
    o reviewing the regulatory and compliance framework for distributed generation and options to strengthen it, including consideration of licensing smaller generators which would require government action;
    o considering options to improve the real-time visibility of distributed generation for DNOs and the ESO.
     Demand disconnection arrangements:
    o reviewing the effectiveness of demand disconnection arrangements; and
    o considering requirements on network and system operators regarding customer treatment during outages.
    In addition, we have identified a number of issues with the ESO’s existing processes and procedures for managing system operation in highly complex and changing conditions. Given the changes which are required in the energy system to achieve Net Zero we believe that the core roles of the system operators are worthy of review.

  10. February 6, 2020 6:46 pm

    Off topic this might be one for Paul
    UK Column News were asking for some help with statistical analysis in this episode
    https://www.ukcolumn.org/ukcolumn-news/uk-column-news-5th-february-2020
    They were reporting on the announcement of plans for decommissioning of Fairbourne in Wales and how this is resulting in plummeting property values
    They were quoting from Met Office report

    Click to access Exploratory_sea_level_projections_for_the_UK_to_2300_-_summary.pdf


    With sea level rises in the range of 0.0 meters to 3.6 meters by 2300
    So only 280 years to prepare for a possible 10 foot rise in sea level but it might be zero
    who knows . Not the Met office it would seem

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