Regulating for a net zero future
The Utility Regulator cannot become a “blocker” to the development of a net zero future, says Chief Executive John French, who outlines the development and restructuring of the organisation.
“I cannot think of a time where the profile of the energy market in Northern Ireland, across the island, UK, and Europe has unfortunately been higher,” states French, who admits that the word unprecedented has been exhausted in the context of a worsening energy crisis.
Pointing to the further challenges to be posed over the winter period, French says that while stakeholders cannot control global events, their response to such events will be critical.
French believes that key to this response will be the development of a more “resilient, efficient, and eventually zero carbon energy system” in the future, ensuring that Northern Ireland never again finds itself in the situation of the past 18 months.
“We need to reduce our exposure to international gas markets, and the impact this has on our electricity market. We need to grow our own energy, ensure long-term affordability, and security of supply, whilst providing a price that enables the economy of Northern Ireland to grow, and households to function correctly,” he explains.
Outlining his desire to see the Utility Regulator keep pace with these changes, and ensuring the regulatory framework needs to be agile, whilst providing consumers with the protection that they are paying a fair and reasonable price for the transition, French states: “We cannot become a blocker to the development of a net zero future.”
The Utility Regulator says that the organisation is undergoing a process of development and restructuring, moving away from its three current functional directorates of wholesale, networks, and retail, to four functional departments of:
Markets: Looking at developing both retail and wholesale markets for gas and electricity;
Consumer protection: Looking to support domestic and business consumers through this crisis and the energy transition;
Price controls: Looking at price controls across the organisation, to support the development of a successful low carbon future at the best price for consumers; and
Networks and energy futures: Supporting the Department for the Economy’s (DfE) Energy Strategy, and the development of our networks so they can support the transition to a zero carbon future.
“We cannot become a blocker to the development of a net zero future.”
French says that, in addition, it is likely that the Utility Regulator’s statutory powers will evolve to enable them to regulate heat, hydrogen, low/zero carbon transport, etc.
Stressing that these changes will need to be focused on meeting the interests and needs of consumers, rather than developing technical policy focused initiatives, French says: “As a regulator, we will have to be open to doing things differently. We are already demonstrating, through things like our funding of low carbon investment and support for the green recovery programme, that we can support necessary intervention now, for the future.”
To this end, the Utility Regulator says the Department for the Economy’s Energy Strategy is the reference point for the decarbonisation journey and welcomes the progress made to date, specifically, the launch of the recent consultation on the one stop shop.
French says that while the overall ambition is for a zero carbon energy system, in the short term, the Utility Regulator has a role in protecting consumers and ensuring industry helps consumers through the energy crisis.
Outlining a conscious move to a more public facing role, honestly explaining what is happening in the market, French says that there is no room for complacency as consumers and businesses in Northern Ireland continue to struggle.
The Utility Regulator has been working with the UK Government since June 2022 to bring their Energy Price Guarantee and Energy Bills Support Scheme, which, when fully delivered, French believes will bring much needed relief to consumers and businesses.
However, he is aware that mitigation has not fully shielded households and businesses. With support schemes only planned to run until March 2023, but the crisis predicted to remain for at least the next few years, he has called on stakeholders to work “more closely than they ever have before”.
“As a utility regulator, we take our code of practice very seriously, and we are clear that suppliers must comply with their obligations,” he states, adding that the Utility Regulator is working with the Department for the Economy, the Department for Communities (DfC) and the Consumer Council to develop a voluntary consumer energy charter for this winter, building on existing regulatory codes of practice.
He asserts: “We need everyone to act proactively on behalf of their consumers. Where this does not occur, we will take action.”
Concluding, French says: “It is a daunting but exciting time to work in the energy sector in Northern Ireland. This winter will be challenging and we need a collaborative response to support all consumers, particularly the most vulnerable.
“Despite these challenges, we must continue to assess how the energy crisis should change our approach and plan for the longer term to develop solutions that thoroughly addresses our current vulnerabilities.
“Ultimately, our long-term destination remains clear; we need to move to that smarter, secure, low cost, and zero carbon energy system that consumers deserve.”