We need much sharper teeth to protect customers, says Ofgem boss

Jonathan Brearley is keen to impress that Ofgem, the energy regulator, gets it in terms of how people feel about bills. The first thing he tells me after we sit down for lunch at a quiet corner table is that he is on the phone every fortnight with energy customers to get almost a “pen portrait of what’s happening in people’s lives”.

“When I talked to a customer a couple of weeks ago, she said what a lot of people say right now, which is even though everyone knows things have got better, everyone knows that the crisis is not the same as it was in 2022 or 23, she is still massively struggling with her bills,” he says.

It is hardly surprising that the chief executive of the energy regulator feels as though he needs to push the point that he is tuned in to the financial pressures still faced by millions of households across Britain.

We meet as he is coming to the end of a tumultuous five-year tenure that has been marked by soaring bills after the Russian invasion of Ukraine and a crisis that caused more than thirty suppliers to collapse and has left household energy debt at record levels. He’s been asked by the Ofgem board to stay on for another five years from January, a reappointment that will ultimately need to be signed off by Ed Miliband, the energy secretary, and the Treasury.

We meet just after midday on a Monday when the sun has made a brief return to London, at No 35 Mackenzie Walk, a laidback waterfront bar and restaurant in Canary Wharf. The venue is thinly populated today, just like the old Docklands itself, perhaps a sign that even the financial services industries are treating it as something of an ease-back-into-the-week day.

Brearley, 51, has prioritised practicality in his choice of meeting point. The restaurant is just around the corner from the office to which Ofgem relocated nearly six years ago, from its previous base in Whitehall. “We used to overlook MI6 on the Thames, but the difference in price is huge, actually. Also it does give us a bit of distance from the government, which is helpful for Ofgem.”

The waitress comes to take our drinks order. Brearley sticks with Diet Coke, and I do the same. It is an unspoken rule that boozing is off the cards at lunchtime, he tells me. Besides, there are practical reasons, Brearley needs to stay sharp. Today is a case in point. He will be heading to Westminster later this afternoon for a catch-up with Miliband, once a colleague in his days as a civil servant during the tailend of the last Labour government.

There is plenty for Brearley and the new energy secretary to discuss. The price cap, which is set by Ofgem and limits standard tariffs for millions of households, is still hundreds of pounds above pre-crisis levels. Affordability and service are top of mind, he says, there are problems with both. Brearley wants Ofgem to have more power to hold energy executives’ feet to the fire, something we come back to later.

Reducing bills is bound up with reducing the country’s exposure to international gas prices and cleaning up the energy system, he insists. Under legislation introduced last year, the regulator’s duty to protect consumers and hit the 2050 net-zero emissions targets, which Brearley led the development of as an up-and-coming civil servant 16 years ago, are one and the same.

I bring up comments made by Mark McAllister, the Ofgem chairman, earlier this year. He said that the bills were unlikely to come down substantially over the rest of the decade owing to the cost of building out the electricity networks to support the shift to renewables. Does he agree?

“When Mark said that, that was before we had the 2030 goals, so those plans are all going to be reworked now to get there, so we don’t know yet what that outcome will be,” he says.

There are also strong margins of error around forecasts, he caveats. “When we’ve looked at general decarbonisation, that’s roughly where you are. But going faster will have both cost increases and cost decreases around that. What we need to do is formulate a plan and then get that costed in detail before we come up with a definitive view.”

He raises the question of Labour’s 2030 target to have a decarbonised electricity system, one “everyone’s asking” him about, before I have a chance to. How feasible is it? “It is a massive, massive challenge,” he acknowledges.

It comes down to what you mean by net zero, he follows up, in characteristically diplomatic fashion. “So do I think there’ll be no carbon at all in the electricity system, there’ll be no gas at all that’s unabated? I think that’s very hard to see. But do I see a system which is by and large decarbonised, with gas playing a very different role? Absolutely.”

We still haven’t really looked at the menu by the time the waitress comes back over to take our food order. Brearley doesn’t generally eat much for lunch, he says. We both keep it simple and just order a Caesar salad, he asks for dressing on the side. It is in keeping with what he jokingly describes as his “proper middle-aged man diet”.

It is just as well that there will be no danger of the food going cold, as Brearley clearly has a lot he wants to get off his chest.

Outstanding energy debt now stands at a record £3.3 billion. That is hardly a ringing endorsement of how well the crisis was navigated by both government and Ofgem, is it?

“I’ve been very open on things like the retail crisis, we should have done things differently and we’ve acted to fix that,” he acknowledges. “But there are limits to what a regulator can do. We don’t have the ability, really, to move money between customers in a way that protects customers who can’t afford to pay their bills.”

The government needs to have a “serious look” at introducing some sort of social tariff, he says, which could mean giving a certain group of households a discount off their bills.

That brings us back to the issue of reform of Ofgem itself. The regulator needs sharper teeth, he thinks. The question is whether the regulator is even baring its teeth enough.

As talk of bad behaviour brings British Gas and the pre-payment meter scandal to mind, the food arrives. It is pretty basic fare, but tasty enough.

An investigation by The Times last year found that British Gas, the retail arm of the FTSE 100 group Centrica, was routinely sending debt collectors to break into homes and force-fit pay-as-you-go meters, even when customers were known to be extremely vulnerable. After initially implementing a ban, some companies have been allowed to resume the practice. An investigation into British Gas remains open.

Ofgem initially proposed a voluntary code, but in response to concerns from charities and campaigners that this measure did not go far enough, a public consultation eventually led to legally enforceable rules being put in place.

“When I look back, to me it shows why you need to move away from thinking, ‘this is a market and competitive forces will deal with all this’, and you need to be much more directive for companies,” he admits.

Regardless of how frantic his professional life is, Brearley ensures he makes enough time for his wife and two young sons. He is still trying to figure out what is left in terms of personal interests outside those two things. Growing up in a farming family in the southwest of England led to a yearning for the countryside, which has pushed him to move from London and to the leafier surroundings of Buckinghamshire.

Bar a three-year stint in private consultancy, his working life has been spent in the public sector. One of his first jobs was establishing a government office of climate change almost two decades ago. His career has never been planned, but energy is an area where he is likely to stay, he says.

One of the biggest things he has learnt during his time in this job, is the need to anticipate curveballs. “I remember my predecessors saying to me when I got the job: ‘It’s a good time to do this job. Retail’s been sorted and it’s all going to be about low carbon.’ And that obviously was not the case.”

CV

Age: 51

Education: Gillingham School in Dorset and Sexey’s School, Bruton;University of Glasgow, maths and physics; University of Cambridge, MPhil in economics

Career: 2002-06: prime minister’s strategy unit; 2006-09: UK government office of climate change; 2008-14: Department of Energy and Climate Change (director of energy markets and networks); 2013-16: consultancy; 2016-present: Ofgem (chief executive since 2020)

Family: Married with two young sons

Receipt

2 x Caesar salad £14.95, 1 side of chicken £5

2 x Diet Coke £2.55

Service £5