On 11 July 2019 Ofgem published its strategic narrative for 2019-2023. In this document Ofgem reiterated its commitment to competition and consumers. However, it also signposted a change in the way it would operate going forward. The energy industry has to be mindful of these changes and have a strategy for addressing them. If it fails to do so it may be caught flatfooted by future regulatory changes, without knowing who to express its concerns to.
OFGEM is changing the way it works
Ofgem is proposing to fundamentally shift the way in which it is organised. This may require the sector having to shift its method of interacting with the regulator. In its strategic plan Ofgem states that ‘Ofgem has traditionally worked like many other bureaucracies, with a hierarchical structure, formal lines of authority, and a fairly rigid division of labour among people with expert training in their fields…This traditional way of working can lead to inefficiencies, a slower response to changing business and industry needs and a less stimulating working environment for staff.’[1] It advocates ‘a more agile way of working, which is more project-based and less durable in structure, with teams forming and reforming more often.’[2]
Established lines of communication may need to change
With a new organisational make up, which focuses on Ofgem concentrating resource as required, industry may find it needs to be more nimble to identify relevant stakeholders. If Ofgem delivers on its commitment to ‘operate in a more decentralised way and with more autonomy, sharing knowledge and joint internal decision-making,’[3] then industry may need to get used to engaging with wider webs of influence within Ofgem. Only by doing so will it be able to keep aware of who it needs to know to ensure policymaking is properly informed. Should Ofgem change to the extent that decision making power becomes both more diffuse and circumstance dependent, businesses will need to maintain high levels of engagement to know they are dealing with the right person.
Engagement is needed now to get ahead of the game
Ofgem is planning to publish further detail on its change plan.[4] Industry would be well advised to engage while that process is ongoing to ensure it understands what is coming and when. At the very least, doing so will help businesses remain equipped to address regulatory risks that surface now and in future. Without engaging companies could be leaving themselves vulnerable, as well as unaware of who to turn to in the event of adverse circumstances.
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[1] Ofgem, Our strategic narrative for 2019-23, 11 July 2019, p.8, link
[2] Ofgem, Our strategic narrative for 2019-23, 11 July 2019, p.8, link
[3] Ofgem, Our strategic narrative for 2019-23, 11 July 2019, p.25, link
[4] Ofgem, Our strategic narrative for 2019-23, 11 July 2019, p.8, link
