Ofgem appoints new chairman

Energy price cap champion Martin Cave has been chosen to become the new chair of Ofgem.

The economist is the preferred candidate of Business, Energy and Industrial Strategy (BEIS) secretary Greg Clark.

Subject to a pre-appointment hearing by the BEIS select committee (scheduled to take place on Wednesday 4 July), Cave will take over from the current chair, David Gray, when his term ends in September.

Cave was a deputy chair of the Competition Commission from 2012 before the watchdog was wound up in 2014.

He went on to serve as deputy chair on the panel which undertook the energy market review for the Competition and Markets Authority (CMA).

In his minority report for the review, Cave concluded the CMA’s proposed remedies “did not go far enough” and called for further, more drastic interventions, notably a two-year cap on suppliers’ standard variable tariffs (SVTs).

He estimated that because of the high level of SVTs domestic energy customers were collectively out of pocket by £2 billion, equating to an average of £75 for each household.

Cave’s estimate was more than the consumer detriment figure of £1.4 billion agreed by the rest of the CMA panel.

The government has subsequently accepted Cave’s recommendation for a cap on SVTs.

Before joining the Competition Commission, Cave published a review for the Department for Environment, Food & Rural Affairs, which recommended the non-domestic water market should be opened up to competition.

Cave is a regulatory economist specialising in competition law and in the network industries, including energy and water.

He is currently a visiting professor in the Department of Law at the London School of Economics, where he is a former BP centennial chair.

In December last year, Ofgem announced its chairman David Gray will retire when his five-year term comes to an end in September 2018.

Clark said: “We are determined to see active regulators who put consumer interest at the heart of their work, the appointment of Professor Cave to lead Ofgem will ensure that.

“Professor Cave has an impressive track record and is well respected for his work regulating the utility markets. I have no doubt he will use his wealth of expertise to protect consumers and help create an energy market that works for everyone.”

Cave added: “It is a real honour to be recommended for one of the most important roles in the energy sector. The work that Ofgem has done with government over the last 12 months has helped consumers get a better deal for their energy. Seismic change is afoot in this sector and I will work to ensure that the regulator continues to protect consumers while working with government and those across the sector to build an energy system fit for the future.”