Interview: Lawrence Slade, interim chief executive, Energy UK

“The phrase the big six is nearly redundant now because of the number of large independent suppliers that there are.”

If Angela Knight’s stint as chief executive of Energy UK was defined by confrontation, the briefest of conversations with her interim successor Lawrence Slade makes it clear he hopes the next era will be defined by partnership.

Formerly chief operating officer, Slade is a familiar face for Energy UK’s membership, comprising a broad church of generators, technology providers and suppliers, and for representatives of other stakeholder groups in the UK energy landscape – including newly appointed energy secretary Amber Rudd, who he admits to being “pleased” to see in office.

And it’s not just the energy secretary he welcomes. At Energy UK’s Regent Street offices, after sharing jokes about the shock outcome of last month’s general election – “we had to do a lot of shredding!” – Slade ­acknowledges that a Tory majority makes life “more straightforward” for his organisation in terms of building clarity on the direction of travel for energy policy. He says it’s also good to know the energy industry can “move forward now” without concerns about the impact of a price freeze, and “look at what the CMA [Competition and Markets Authority] comes out with and work with that” as a means for effecting market reform.

In short, the election result was “not at all bad for the industry”; indeed, Slade believes the new parliamentary term represents a “golden opportunity” to “have a new conversation” with government about what energy policy should look to achieve, by 2020 and beyond, and how this should be communicated to the public.

“In the last few years there have been so many brickbats thrown around the place that we haven’t achieved anything,” says Slade. “So let’s say it’s a fresh start, a new government, let’s start really having this conversation [about decarbonising the economy] and get people buying into it.”

The interim chief executive is confident that government is ready to play its part in this campaign for public hearts and minds – despite many in the industry still feeling embattled against political fire in a persistently negative environment for consumer trust – and he urges companies to remember what they signed up to in Energy UK’s first formal manifesto, which was launched in February. It promised industry would strive for new heights in honesty, customer focus and vigour in addressing the energy trilemma.

“I don’t want it [the manifesto] to be forgotten,” says Slade. “I don’t want it forgotten in terms of what we have asked for from a government perspective, but I also don’t want it to be forgotten in terms of what we as an industry have committed to do.

“There’s no point in saying to government on the one hand that they need to be transparent about the potential costs of energy policy if we don’t back that up with our own actions. It’s something that’s got to be worked on in partnership.”

Slade knows there will be some early trials for this collaborative approach – not least the preliminary findings of the CMA this summer, then its final findings, the publication of the fifth carbon budget and discussions at the UN Conference on Climate Change in Paris, which are all due to take place this winter.

“We know there are going to be a lot of difficult ­conversations,” he says. “We know we are not going to agree with everything the government says and they are not going to agree with everything we say. But let’s try and identify those areas where we do all agree and push on them.”

It sounds simple. But achieving any kind of consensus on what constitutes the “right” way to go about decarbonising the economy and agreeing which forms of new energy generation should be backed in an arena with as many stakeholders as energy has, remains a ­difficult task despite the majority government.

First off, there’s the age-old challenge of developing energy policy that will stand the test of time, beyond this parliament and the next. This of course requires Energy UK to maintain and develop its relationship with Labour (no mention of the poor Lib Dems) so that the risk of serious overhauls to the energy investment roadmap in five or ten years’ time is minimised.

But in a world post-Scottish referendum, with devolution afoot and 56 SNP MPs in Westminster, it also requires some careful thinking about the way in which Energy UK represents the interests and ambitions of the energy sector in each corner of a seemingly increasingly divided UK.

Slade acknowledges the challenge, but is not worried by it. “We’re all going to be spending a lot more time working with our colleagues in Scotland,” he says. “And I don’t think that’s a bad thing at all.”

Indeed, Energy UK is taking steps to embrace the impact that devolved powers will have on its operations. Slade reveals that the trade association is in the process of recruiting a Scotland-based team member for the first time, “to help us with having someone on the ground there five days a week”.

“Scotland has got a tremendous amount to offer in terms of the UK generation story and you can’t ­service that from Westminster,” Slade explains. “Equally, it’s not just a generation issue. We know that there are devolved aspects of energy efficiency already. A lot of our members are obligated to deliver that and have significant customer bases in Scotland. We have to cover all of those grounds and be effective.”

Is there scope for Wales to receive the same treatment? Slade says it would be “a logical progression” and points out that the Silk Commission has already made provision for devolved planning powers in Wales for generation projects of up to 350MW.

Beyond reaching out for key political party and regional engagement in developing energy policy, Slade is also acutely aware of the need to look across government departments’ stakeholder groups and seek out areas of common purpose with other long-term strategy developments.

One key area that he hopes will receive more attention in the coming months and years is the alignment of energy and industrial strategy.

“As much as we have to make sure that we’re doing the right thing by domestic customers, let’s make sure that we’re talking to energy-intensive users. Let’s make sure we are talking to businesses.

“This doesn’t always come through enough,” says Slade. “It’s important that, from a country point of view, we look at how we are supporting our industrial users, how we are maintaining the competitiveness of the country compared to our international competitors – it seems logical. There are challenges to achieving it, but it doesn’t mean it shouldn’t be looked at.”

In the meantime, while these long-term ambitions are nurtured, the UK energy industry has myriad more immediate challenges to deal with – including absorbing the outcomes of the CMA inquiry and pushing forward with the national rollout of smart meters.

With the preliminary findings of the CMA inquiry into the energy market potentially ready by the end of this month, companies will be preparing a range of possible responses. But while Energy UK has deliberately taken a step back from the CMA’s discussions with “the very firm view” that they “are for the industry – not the trade association”, Slade is anxious that the sector should avoid falling over itself in responding to the inquiry’s first thoughts.

“I don’t think it would be appropriate, whatever it comes out with, to rush into early remedies,” he says. “Let’s have a sensible debate around the issues, let’s see what they come up with, what they find, work them through. But ultimately, it’s the final remedies that they come out with at the end of the year [that count].”

Not that Slade advocates standing still while the inquiry takes place – indeed, he believes that reinvigorated market forces would never allow this. “This is a market which is changing in front of everyone’s eyes. The volume of suppliers now in the market, the number of customers now active in the market – it’s actually a very exciting time for the industry and that’s the thing that’s changed so drastically from when the investigation was announced, to where we are today. There is real competition.”

Quoting high switching figures – “1.2 million people up to April this year had changed suppliers” – Slade rather boldly claims that “the phrase the big six is nearly redundant now because of the number of large independent suppliers that there are” and that the market is “very healthy”.

It’s a claim that many consumer groups and independent suppliers would find controversial – or simply spurious – and ­certainly not one that was reflected by Ofgem’s Supply Market Indicator (SMI). But of course that measure has recently made its way onto the scrap heap.

Slade grimaces at the mention of the SMI – a measure Energy UK and Slade in particular publicly and repeatedly found fault with. He must be pleased to see its demise, but Slade refrains from any crowing. “We fully accept that you need to have, there need to be, metrics around performance in the industry – why wouldn’t we want that? I just think that it’s important that they’re good, solid and fact-based as much as possible.

“That’s why we took steps 18 months ago to start publishing the wholesale market figures, to start publishing switching numbers, to start getting this stuff out there. To say ‘hey, this industry doesn’t want to hide things’, we just want to get them right.”

Energy UK has offered to work with Ofgem on the development of a new industry metric, a task which will be complicated and which will take time. Slade speculates that it’s unlikely we’ll see a replacement for the SMI before the end of the year, but he’d rather a slow and steady approach that results in something usable than a rushed response that will promptly need an overhaul.

His thoughts on the beleaguered smart meter rollout are the same. While he ranks it highly among Energy UK’s list of priorities at the moment, Slade is ever mindful of the size of the challenge involved in installing 27 million smart meters across the UK by 2020, and of the many technical challenges still to be overcome in terms of meter specifications, data transfer and more.

“We’re trying to tick off technical challenges in a very constructive fashion which will deliver something which will really revolutionise the supply side of the market,” he explains. “Naysayers will pick on the technical challenges and use them to cause negative thoughts around the whole programme. What we’re saying is that, yes, there are technical challenges to overcome but that if we work together, they can be beaten.”

Those naysayers have recently raised fresh concerns about the likelihood of delays to the smart meter programme. A recent report from the Institute of Directors, Not too clever: will Smart Meters be the next Government IT disaster? makes the case for a full-scale review of the programme and Utility Week has heard rumours of a renewed effort to have the rollout owned by the distribution networks.

On the latter point, Slade says a change in ownership of the programme at this stage would be “very very very confusing” and that he firmly believes there are great benefits to supplier leadership “if we get it right”.

On the prospect of delays, he’s philosophical. “Let’s hope it doesn’t get delayed. But there will be problems. The critical part is for Decc [the Department of Energy and Climate Change], Ofgem and the industry to face up to those challenges and see just how much they can achieve by 2020.”

In a cynical world, it’s likely that however great that combined effort is, criticism and mockery will still abound. But a wall festooned with satirical Matt cartons in Energy UK’s reception indicates that the trade body has long since toughened itself against this inevitability. Slade grins at the acknowledgement of the collection. “We can’t get above having some fun poked at us,” he concludes.