A year as Ofgem’s Head of Scotland
Blog
It’s hard to believe it’s been a year since I became Head of Ofgem in Scotland. In that time there have been some real highlights as well as challenges - and I’m not just talking about the Glasgow’s famously changeable weather.
Ofgem has a significant presence in Scotland, with nearly 130 staff based in Glasgow, all of whom work to protect energy consumers and to deliver social and environmental schemes across Great Britain.
One of our priority areas that I have discussed a lot with stakeholders is our work on vulnerability. Our Consumer Vulnerability Strategy, published in 2013, has been very influential not only in energy but across sectors.
In September 2015 we published a progress report on our Consumer Vulnerability Strategy. In that report amongst other areas we announced plans to update and expand the priority services register which provides a range of free services to those who are in vulnerable circumstances. We made sure that suppliers now offer a free or low cost number for customers to contact them. We also encouraged companies to introduce tailored social tariffs for consumers in vulnerable situations.
Alongside this we have heavily focussed on the pre-payment market. For example, we have worked with suppliers to abolish the cost to install and remove prepayment meters as these costs provide a barrier to people switching. As of December 2015, only around 4% of consumers would now face removal charges, and only around 1% would face installation charges.
As well as suppliers, Ofgem expects Distribution Network Operators to play a part in helping consumers who are vulnerable. We recently had an independent review done of their approach and are asking stakeholders for views on how these companies are delivering for vulnerable consumers.
I have a dual role and also lead our work on regulated networks across GB. So one of the highlights this year was when our decision on the review of transmission charges was upheld by the High Court.
Transmission charges are needed to fund new investment and to maintain the network. They are paid in part by suppliers and consumers, and in part by generators. Following a detailed review, we proposed changes so that the charges reflect both the location and type of generator using the system. The main change was to recognise that renewable generation uses the system less than traditional forms of generation and so imposes lower costs. The result of the high court challenge confirmed the approach we had taken was the right one, paving the way for the new charges to come into effect from April 2016.
Over the year, I have been out and about meeting with a wide range of stakeholders, MSPs, MPs, the Scottish Government, industry bodies, local housing associations, local energy groups – and others. Listening and learning from their experience is invaluable as we develop our work and I am also grateful for the opportunity to explain what our work means for energy consumers in Scotland.
I want to end by highlighting the work of Ofgem E-Serve who deliver and administer of the UK Government’s social and environmental schemes. Scotland is extremely well represented by the schemes. 21% of the capacity in the Non-Domestic Renewable Heat Incentive Schemes is in Scotland, and 11.5% of ECO measures are installed in Scotland.
The Chancellor’s budget last week announced that E-Serve functions will be split from the regulatory work of Ofgem. These changes won’t happen overnight, and will require primary legislation. The future is bright for both our regulatory work, and our delivery arm, and I’m confident that these changes will help create a more coherent, customer-focused energy policy delivery landscape.
It’s been a busy first year as Head of Ofgem in Scotland, and I am sure the coming year will be no different. As the CMA concludes their review of the energy market, we will be responsible for implementing some of the changes they recommend, and we will also be working closely with the Scottish Government as they consider how to utilise the new powers on energy efficiency and fuel poverty in the Scotland Bill. And of course, there is the ongoing task to protect the interests of consumers in an ever changing energy market. There’s never been a more exciting time to work in the energy industry, or to work for Ofgem in Scotland.