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Hello and welcome to The Rest is Money with me, Robert Peston. And with me, Steph McGovern. Now today we are joined by Jonathan Braley. Now, he is CEO of Ofgem, of course, the energy regulator. It's a job he's been doing since 2020. So he's been in the game a long time in energy. Before that, he worked in Downing Street as part of...
Tony Blair's strategy team who spent time in the civil service where he led the task force setting up the office for climate change. He's a man who's been consumed by energy policy for at least the last two decades. And now... given he's in charge of the regulator, Robert, there is a lot to talk to him about.
Yeah, there certainly is. And if you're listening and your heart immediately sinks when you hear the words energy policy and regulator, I would ask you to bear with us because regulators in this country are the great... hidden powers, right? I mean, regulators, whether they're him or in the media space or in the water space, my God, they've had an impact on all our lives.
And so one of the things it's really important for podcasts like ours to do is to hold these people to account. And frankly, most of them are invisible most of the time. So it's great that Jonathan is here. And then there's just the other obvious point, which is. Whether you're struggling to pay the bills to heat your home or whether you are a business with huge energy costs and you're desperately worried how you're going to pass these on to customers.
The decisions that he and Ofgem make are absolutely central. to you, to all of us. So here's our interview with Jonathan Braley. Jonathan, great to see you. You know, energy so important to our economic prospects, our living standards. Climate change. But I want to start with something very specific in relation to what the International Monetary Fund yesterday. They said inflation would be going up.
more in the UK than in any other big developed economy. And they said the big reason for that is that our energy costs are going up more in the UK than in other places. I mean, is that your fault? Why is it happening? Well, when I think about energy costs and when I think about the changes we've seen over the last few years, I always start with the customers that we work with.
Now, it gives me no pleasure at all to be the person on the Today programme and elsewhere talking about price rises and the sort of changes we've seen over the last few years. But look, Robert, the reason is really simple. We are more reliant on gas in this country than other countries. So as that gas price changes, our energy prices change.
Now, if you look, for example, at what happened before winter, we saw the gas price go up about 40% roughly from October last year to December, and that led to about a £100 price rise for the average household. Now, those prices are coming back down again, so energy costs might come back down.
But we are dependent on a market that I don't control, the government don't control, but is set ultimately internationally by the international gas price. And that's the principal reason for why our bills are more. You talked, Jonathan, recently in your kind of state of the market speech about...
how things have changed since you started the you know an energy policy and you say you know when you started we faced this choice between the environment cost and security but you think those things are closer together now What do you think has changed? Because there's a lot of people who still think that, you know, it's one or the other, you can't have all of them. No, look, I think we're at a pivotal moment for this transition.
So what we have is a country that has grown its renewable sector. But as I've said, you know, your heating system is provided by gas. A lot of your electricity is provided by gas. Now, the only way in the long term I can see for us to get what we all want, which is a much more stable system. and a stable cost base and a much more secure system is by building more renewables, building more low-carbon technologies, renewables, nuclear and others.
And so for me, the world has changed. When I started in 2006, when we were arguing for the Climate Change Act, we thought there was a big trade-off. We thought that things like offshore wind were much, much more expensive than gas-fired generation. But two things have really happened. I mean, offshore wind costs have plummeted in the last 15 to 20 years. And indeed, gas costs have gone up significantly. So now in my mind, both for cost, for security of supply and indeed for...
The renewable sector is what we need to do to provide the energy sources that we need. I mean, there is very resonant politics. Kemi Badenoch, the leader of the Conservative Party, and Nigel Farage, the leader of reform, both saying... that it is the government's commitments to hit net zero, to build more renewables, which is the reason, they say, why our energy prices are higher than other countries, are uncompetitive. You've just said they're straightforwardly wrong.
Well, ultimately, it is for government and for ministers to decide the level of ambition that we face. But I was just wrong. But coming back to the facts, just coming back to comparing cough. renewables are very cost competitive with gas and so low carbon alternatives are lessened.
So if you look at the fact, just the objective facts, without getting into the political debate, if you want a more cost-efficient system, you need to move to one that has renewables as a large part of it. Now, the pace at which you do that and the scale at which you do that is a matter for politicians. But the fact is... Without a renewable sector, our costs would be more reliant on gas and more reliant on that international gas price. If I look at a country like...
Spain, for example, way more of the costs of transition are paid for through the general taxation system. is the fundamental problem in the UK that we expect, the government expects customers. to pay the bill of the transition, would it be more sensible in terms of cost for consumers, cost for industry, if more of the burden from getting to gas-dependent...
to renewables was put through general taxation. So I am in the fortunate position of not having to manage the fiscal envelope and not having to manage public sector borrowers. So, of course, it would be better for customers if more of this was borne by the taxpayer. But I accept the Chancellor has a whole set of trade-offs that I don't need to face. The point is, is that if you look at Spain, for example, you look at a system that has more renewables, they are more cost-effective.
So I spoke to someone, one of the industrial leaders in Europe, looking across Europe at the different energies. And he was being asked the same question you've asked me. Why are we doing all these renewables? Why don't we simply go back to fossil fuels? And he pointed to Spain and said, look, because it's more cost effective to do it that way. And just on that other issue about our vulnerability to rising gas prices.
We have a system here where the marginal cost of energy is set by the price of gas. All right. Is there... Given now that we've got a very large renewable sector, is there another way now for setting the general energy price? that is less dependent on gas fluctuation. Is the way that, in a sense, we organise this thing, the system, capable of being reformed?
Well, the government's undergoing an almost three-year reform process looking at how we might change that market. But the simple fact is that for new renewables, so for the stuff that we are hoping to build in the next two years, they're effectively on a fixed-price contract. So the price of that electricity is not set by gas. So the more we build projects like that, the more we put them on long-term prices, the less our system is dependent on gas.
Now, the department did look at saying, should we have different markets? Should we separate the whole thing out and have a renewables market and a gas market? But pragmatically, that doesn't work. Why doesn't it work? Explain. It doesn't work because the electrons that come into your house come from a mixture of sources. So it's very hard to sort of define two different prices coming into your home for electricity.
but contracts for difference. So those long-term contracts we have for renewal... are things that already separate the gas price from the price of renewal. So it's something that over time will happen and significantly increase. But is there a world in which we can, you know, even before we're completely weaned off gas, forgive me for pressing you on this, but... It has been unbelievably painful for businesses and for households.
You know, we are so dependent on that gas, not just on the volume of gas that comes in, but on that marginal cost of gas in terms of setting the tariff. Intellectually, I've struggled to understand why there isn't a way of smoothing it differently, given how big the renewable sector is now. Well, it comes back to putting more renewables onto those long term contracts. So basically, the concept we have now.
is that renewables pay a get a fixed price for their The more we build renewables, the more they're on that fixed price, the less your bill is being set by the gas. So it is something that will happen over time, but it's all part of making this transition a much bigger and broader transition. Jonathan, the thing I'm really interested in is someone who, where I'm sitting now, out of my window, I can see lots of wind turbines. So I'm up on the northeast coast.
And the thing I'm really interested in is this idea of zonal pricing, the idea that these areas where, like my area, like large parts of Scotland, often areas where there's... higher deprivation and things. have got this enormous amount of capability to create renewable energy and this zonal pricing idea of it being cheaper for us, for the people who live in these areas where this cheaper energy is being made. But it's really it seems to be quite controversial, this idea, doesn't it?
You know, there's a lot of debate around whether if you make it cheaper for people in these areas, then investors might think, well, hang on, we're not going to make as much money, so we won't invest as much. What are your thoughts on this idea of zonal pricing? Can you see it working? Well, honestly, this has become a massively hot topic in the energy industry right now.
And what we're seeing are companies taking very polar positions with part of the industry saying, we absolutely must have this. The other part of the industry saying, if you have this, then we're not going to invest or we'll charge a lot more. And I think the arguments are more nuanced. So it's worth stepping back and thinking, what problem are we trying to solve here?
And it's really quite simple. It's two things. It's saying when you build a wind farm, particularly when you build a wind farm in Scotland, you have to pay for wires to bring that electricity all the way down to England to where most of the demand is. So when you add those costs together, they're different just than the cost of building the wind farm itself. So we have to have a way of making sure that we locate plant in the most efficient place possible.
Second thing you want to do is you want to make sure that those plants operate efficiently so that they are discharged at the right time. And we're not in the future paying wind farms to turn off as much as we are today. Now, one answer is zonal pricing because it says, well, if there's more wind power, your price goes down. Therefore, your incentives to generate go down and the system balances more organically. And I can see the attraction.
But the counter argument against that is people say, well, I now have no idea what that wind farm is going to make. So I don't know what my returns are going to be. Therefore, I'm going to charge more to invest in the first. And really, you've got a sector debating these as if they are two very polar extremes. My view is we need to do the maths, we need to work together.
I'd like to ask investors, what would it take? What protections would you need to get back to investing cheaply in a zonal system? And equally, I'd like to ask those who want a national system, what other changes do we need to make to make sure we don't build wind farms in the wrong place and charge everybody more? And that's really the debate that's there. And, you know, it's one that we need to have. But my message to the industry is let's have a sensible conversation on the fact.
and treats it less like some sort of culture war specifically for energy nerds. Yeah, because it could also bring businesses to areas where this energy is cheaper and you know from a kind of equality point of view the regional inequality is the thing I bang on about the most which won't shock you given my accent but it feels like Just like we get these kind of enterprise zones or these free ports or whatever. This could actually be something that helps.
With the regional equality, we do have. And then there's nuclear. If we look at why France has way cheaper power, it's because they've consistently invested. in nuclear and therefore they have much more security over their price. If you look, I don't know, 10 years ahead, what share do you think of our energy will come from nuclear? I mean, in the UK, like many other countries, You could argue that it's scandalous.
that we allowed our nuclear industry to wind down and didn't reinvest over the last 20 years. Well, as you probably remember, in the energy policy debate, there was a big question over nuclear for a long time. And without a doubt, in 10 years, we'll certainly see Hinkley. We might see size well.
see on the system and what about small modular how many of those will we see over 10 years i mean i i mean it's going to take time to develop i would love to see small modular playing a big part in our energy system now there is a cost challenge there there is a lot the government needs to work through but in terms of new and emerging technologies that certainly has a great deal of potential
But you can't put a percentage on how much they'll be in 10 years. Not at this stage. And look, small modular reactors in particular will be still small in 10 years because they're going to take a long time to develop. But they could be a big part of our 2050 system. And no, not right now. You can't put a number.
But it is these technologies that are our future. And it comes back to the point I made right at the start. These things are basically all modular units where you build them and to run them costs very little. That's a much, much more stable system, whether it's wind farms, whether it's small modular reactors, whether it's big nuclear power stations. To me, that's much more stable than relying on a gas market we know we can't.
The other big issue, Jonathan, is investment in the sector. What do you think needs to happen to make the UK energy sector more attractive to investors? Well, the one thing I am really proud of is the way Ofgem has changed its approach to how we get investment in this. Now, you know, it's true of many infrastructure regulators. If you look in the 20 teens...
we were in a bad place with the industry. We had an industry that seemed to be focused on gaming the system, and we had a regulator, therefore, that saw their job as to protect customers by protecting against it. Talk us through what that gaming was. Well, to give you an example. So if you look right back in 2012, 2013, when we set a price... Network companies, in some cases, would see their job as bidding as high as possible. So saying we need to build all this stuff.
And I tell you, I remember my first moment in Ofgem. So the day I sort of started as networks director, I sat next to our chief engineer, who was a really mild-mannered, calm, lovely person. And I just kept hearing these sort of minor explosions. So of every sort of five minutes, I said, what's going on? And she talked about shunt reactors. And she took me aside in the room and she said, they told us they needed loads of these. And now they're saying a year later, they need hardly any.
And companies were keeping that money and keeping a share of that money. And that was going towards their shareholders. Now, a regulator in those circumstances becomes quite defensive and finds it hard to approve new funds. So we had a macro conversation with the network industry, which basically said this. They liked you, basically. They said, we wanted to invest, and then they didn't, and then they gave the money back, the money that you'd allowed them to earn from the energy price.
They gave that to their shareholders. Exactly. And so we had to bring in lots of protections that were protected against that. But the point is we then had a sensible conversation with the industry leaders and said to them, it is in customers' interest that we build very fast. It is in your business interest that we build the infrastructure we need. And so if we work together the overlap between what customers need and what you need is really strong.
But if you lose public confidence, If you resort to some of the things we've seen in our history, and I won't sort of comment on sister sectors like water, but we've seen it elsewhere as well. then we will not be able to deliver for you and we won't be able to deliver for the country. So what we said is let's redesign our system to get that money in as far as possible.
fast as possible and what we ask of you is to deliver on time and on budget and right now we are building a monitoring regime which will make sure they deliver their part of Jonathan, if you could sit tight for a couple of minutes. We've got loads more we want to ask you. We're going to go to a quick break and then off the back of the break, we are going to do our monthly small business barometer. You know, small businesses.
the pressure of energy prices too so we're going to have a quick chat about that and then we'll come back to our interview with you Jonathan but first here's the break This episode is brought to you by Moneybox. Now we've been working with Moneybox for a while and we are delighted that so many of our listeners have opened Moneybox Cash Isis.
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Welcome back to The Rest is Money. We're going to be chatting more to Jonathan Brealey, the CEO of Ofgem. in a moment. But first, we just want to bring you the small business barometer brought to you by Monzo Business, because every month we look at different challenges facing SMEs. These are the guys who employ 60% of the UK workforce. So it's really important what's happening to them. This time we want to talk about what companies are doing, I guess, to work.
smarter and not harder. There's a lot happening at the moment. We often talk about AI and how AI is driving things like customer service and lots of other elements.
business life also the government's making tax digital rollout is kicking in next year um so i guess technology is no longer really an option for smas it's an essential part of survival and growth there are clearly advantages but the uk lags behind other nations in sme tech adoption so we're going to talk about what's holding us back and more importantly how we can catch up and just to give you a little stat on this just over half of
uk smes use at least one ai powered tool it might be a chatbot it might be automated bookkeeping marketing tools for detection so businesses are using it in some sense But there are loads more tools out there and the adoption could be a lot more, couldn't it, Robert? You made a very important point, Steph, which is that... Every business is going to have to do way more online because of making tax digital from next year and then in a rolling program, depending on size.
Everybody will have to file revenues digitally and do digital bookkeeping. in real time and submit every quarter. That's a massive change. But digitizing an incredibly important part of your business. you know, bookkeeping, keeping control of money, is coming whether businesses like it or not. And it seems to me... If that is being forced on everybody, then you should turn that to your advantage by looking at other aspects of what you do. You know, you could get.
you know, digital help with. I mean, just a little thing about myself. I went to chat GPT 3.0. I set it a challenge. I said, look at... all the free stuff I put out there on the internet and come up with a marketing campaign that would persuade people to pay for that. And I've got to tell you what it came back with was super intelligent. And five years ago, I would have had to pay somebody quite a lot of money.
to come up with that kind of plan. Yeah, yeah. I know we use it for loads of different things in our business as well, you know, just in terms of doing job specs. for us or personalized marketing tools. It's quite incredible what you can do. And also, Robert, I should tell you, I'm also one of these people who's going to have to
be made to go tax digital. So I've got a training session actually on Friday with my accountant to get me up to speed on what apps are out there and what you can do to make it digital. you know we've got to get with the times certainly right certainly right and you know it's about productivity I mean it seems to me the two big
advantages of adopting technology. You can get your costs down. But the other thing you can do is just come up with way more imaginative ways of getting to customers and cheaper ways of getting to customers. So for me, the real excitement... is both in getting your overheads down and in reaching many more people in a much more creative way.
I don't know if you can hear you, Robert, but the seagulls are going absolutely wild outside my house. I wonder if there's some type of digital revolution they could get involved with as well to keep them busy and stop them squawking all the time, waking me up every morning. But there we go. Thank you to our business banking partners, Monzo Business, for supporting this part of the show. You can join me and over 600,000 other businesses already banking with Monzo Business.
and sign up for an account today. Only sole traders or limited company directors in the UK can apply. T's and C's apply. Now, obviously, one of the things that... AI and technology can help with is energy. So let's go back now to our interview with the CEO of Ofgem, the energy regulator, Jonathan Brearley. Given that there is Such a big cough.
in our bills related to investment, particularly in cleaner energy. And that is, I'm afraid to say, even though it's not going through general taxation, it's still basically a tax on most of us. Why has this idea of a social tariff not really properly taken off? Because... What we have is a regressive system where everybody has to pay a lot for energy. Why don't we have a system where those who...
are really struggling to pay the bills on low incomes, can't get cheaper power? Well, you may know I've been talking about this and asking that question for a number of years. I mean, some of the things we saw during the crisis still don't make sense. So we do have some form of a social tariff. We have what's called warm home discount. That takes £150 off of bills of a subset of people. I was really pleased that the government have extended that to over 6 million homes.
But that number, £150 discount, was the same in 2021. Through the gas crisis and out the other side of the gas crisis, that number hasn't changed. We put £40 billion of support in for customers during 2022 when prices went through. Now, my question is very simple. Wouldn't it be better if we were able to target that support more at those who needed it?
So one thing we are doing within Ofgem, and I know this has caused controversy over the last few days, is asking the question, as you get that investment in place, as you get those fixed costs in place, Is there a different way we can spread those costs out? Now, look, we're at the stage of exploring that. There are big trade-offs, particularly for a regulator to play that kind of role. So we would need a relationship with ministers.
But I think the question of how do we make sure, particularly those who can't afford it, are able to manage is going to be fundamental for the next five years. And I should say that you've got a similar question for industries that need that kind of help. totally i mean i see through the kind of work i do up here with the various charities and food banks and things
Energy is the biggest stress for people. And I know you yourself quoted the YouGov research saying 40% of the people poll said energy is their top concern and debt arrears have reached a record high.
Do you ever see a time when it's not going to feel like that for people? For, you know, the people who are in the most deprivation feeling like they cannot afford to heat their home and cannot afford to, like... charge their phones or whatever else they can't afford to to do what is a kind of basic right really yeah and you know over the last three years i've spent a great deal of time at food banks i've spent a lot of time with community groups and as you can imagine the level of
both concern and, quite frankly, anger is huge. Again, when I started out in Ofgem, or I'd started energy policy in the 2000s, Prices were a problem, but they were a sort of problem in the background. We weren't front of people's minds. But right now, as you say, energy debt is one of the biggest debts that many, many customers pay. Now, I think you've got to divide the problem up slightly into two parts. The first part is how much of this is an overhang of the last two or three years.
So there are some families that have simply got themselves into an unsustainable situation, not because they can't pay their bill today, but because they racked up so much debt over the last two years because prices went up to £2,500 a year for the average house. Now, we think, and we are designing with government a scheme that targets support at those countries.
that helps them get out of that big lump of debt that they're in and helps them get on a more even keel to manage their bills. I think that will bring down debt. And then coming back to your question, Robin, we need to find a way to target support at those who can't manage on a day-to-day basis. Now, that's not just for Ofgem, that's for government as well. But I would like to see a way in which we begin to tailor that support more to a family's energy use.
Because you can have two families on the same income, one in a well-insulated, well-built flat, the other in a drafty house, particularly, frankly, in the northeast, where you do see a lot of housing in this condition. And they're paying very, very different energy bills. So I'd like to support better targeted people's energy. but also able to change as the market changes. Because while we are on this kind of
roller coaster of a gas price, things change very fast in the market and the benefit system really struggles to keep up. So we're continuing to work with government on that, but I think that should be a component we put together. to make sure not only do we get to that destination I want to get to, so one that is low carbon, stable cost and secure. But also we make that journey along the way the best it can be.
The other side of this, Jonathan, as well is, you know, you've got consumers using energy, but you've also got businesses who have really been hit hard by energy costs. You know, one of my friends who's got a restaurant chain has had to close. because of the...
fact that it just wasn't worth it anymore. The energy bill was too much. I've seen myself in a couple of the retail businesses I have where we have to really... you know, look every month at how much energy we're using to just make sure we can afford the bills.
There's that side of it as well, isn't there? The pressure this is putting on, particularly small businesses. Well, actually all businesses, but it is a big pressure, isn't it? No, it's massive. And I spent time with... with people who have been in tears over losing part of their business due to energy costs and look I think again you need to look at
the different components of this. I think there is a problem we all need to think about, which is the large scale industrial costs that I described. So how do we get people to invest in building factories here? How do we make sure that we're competitive to other countries? But when you think about small businesses, there's two parts. There's the underlying cost of energy, but there's also the way they were treated by their companies and indeed by energy brokers.
Now, I remember talking to one small business owner who said to me right at the height of the crisis, you know, when he was desperate to get onto a tariff, he was told by a broker, you have to sign today. You have to sign for a number of years and you have to lock in a long term contract. Now, the problem is, given how worried he was about this price that was already going up, that's what he did. And, of course, six months later when prices came down...
That contract that he signed was out of the money and he is still struggling with his business to make ends meet. to work his way through the end of that contract. So what do you do about that? Surely that energy broker needs to get their kind of, you know, whatever it is, their licence or whatever, taken off them? Well, I completely agree. Now, we don't regulate brokers today.
We wrote to government in about 2022 asking them to give someone, most likely us, but we don't know yet, powers to regulate brokers. And so just to be clear, this is not like... a money broker, somebody who is in the business of... facilitating loans or finance.
where there is a regulator, the Financial Conduct Authority. These guys are completely unregulated, are they? So right now, there are codes of conduct, but they are unregulated. So we are working with government to put a system in place that will regulate them. I can't sort of preempt where they go, but it is very possible that Ofgem has a role in that. And that is how I think we then address what is the underlying problem, which is people who are locked into very, very high contracts.
Second thing we must do is make sure that retailers behave better towards business customers and they help them manage over our difficult times. And it's a bit like a household. You know, it's not a case of subsidising energy. Obviously, a company can't do that. but giving flexibilities and working with businesses to adapt to the circumstances.
at least allows that transition to go from being something that's terminal for business to something that is difficult but manageable yeah just just to give an example from what i've experienced with this we moved into a new unit in a shopping center and the previous occupiers of that unit had been McDonald's who had obviously massive Our business doesn't, but we were stuck on their energy tariff essentially because they obviously paid a much higher base cost.
to get a lower per unit energy cost. And it really shafted us. We ended up having to move that business because we were just stuck in this long contract. And I guess that's what you're saying. It's how you change. these to make them more flexible for people so they can move with the times and not get stuck in these long energy contracts no absolutely and it's also though an example of a more complex market we're moving
So as you both know, government is reviewing Ofgem at the moment and looking at our role of remit in the future. And one of the things we're saying to them is actually the whole energy market is much more complex.
So if you think about that job that almost your landlord is playing as your broker, you think about where's your energy going to come from in 2035? It's going to come from solar panels. It might come from your car battery. You might have a battery in your home as well as what you get through the pipes and wires. So we think you need to re-equip the regulator to be able to deal with this much more complex world.
and much more fragmented. You know, in 1990, which wasn't when I started, a bit before when I started, but right at the start of this transition, we had a small number of large power stations and we had customers pretty much able to use demand when they wanted. We're moving to a much more fragmented system. And so we're going to have to borrow tools from financial services. We're going to have to look to other regulators to get the sorts of tools we need to protect customers like yourself.
What proportion do you think, particularly of households, I'm afraid this will probably apply more to... slightly better off households, will effectively be energy self-sufficient. You know, you'll have solar on your roof, you'll have battery storage, and for much of the year, you just won't need... to get energy off the grid at all. I mean, given the greater efficiency...
of renewables. That's going to be quite a big chunk, isn't it? I think you're unlikely to see people being so self-sufficient that they come off the grid. Because if you do that, if your solar panels don't work, you've suddenly got... No, no, but I meant the grid will essentially be your insurance policy. It won't be your prime source of... I mean, obviously, there are people like that already that are in that position. But my view would be there are going to be many more.
I think we hope there are going to be millions of people that are going to have solar panels. Probably likely as battery costs come down, they're going to have batteries installed in their homes. And we do think, you know, regardless almost of... What government does, we are going to see a big increase in electric vehicles because they're becoming so cost competitive. So energy use will be different for very, very many people.
Now, I hope when we design that, we don't just design it so that's for the most well-off, because actually these things are cost-efficient ways of making sure some on the lowest incomes can meet their needs. We want to work with the government with their warm homes plan because we'd like to see poorer people benefit from this transition. Can I just ask you one thing as well? I'm obsessed whenever the headlines come out about...
you know, potential blackouts. We had one recently, didn't we, about everyone should prepare a 70. two-hour survival kit in case Putin sabotages the gas pipelines and cause a massive blackout. How seriously are you thinking about blackouts? How well prepared are we if there was a complete shutdown, whatever it might be, whether it might be cyber or some type of physical attack? Is this something you guys plan for? Do you have strategies in place?
Absolutely. And look, I've been sort of in energy policy, as I've said, for about 20 years. And every year, actually, you run these sort of rehearsals.
you know what would happen you have the companies you have government you have the regulator you have national grid you have the system operator all working together to figure out what would happen in a blackout but it became really real in 2022 when we saw the gas crisis and we saw what was happening with the gas market And there were all sorts of things we had to put in place to make sure that customers were as protected as they could be.
So the fundamental for me is two things. First of all, it's being really vigilant on security of supply. It's thinking hard about cybersecurity. It's making sure the companies are always improving their IT and their digital systems to protect against it. But secondly, it's about being ready. Now, we have one of the most resilient systems in the world. Thankfully, blackouts are a relatively rare event in the UK.
But we always make sure we work with all the energy companies to make sure if it were to happen, then things are in place to protect customers. And of course, when something goes wrong, like it did with Heathrow, We will be getting deep into that, looking first of all at how the companies behaved. Are they maintaining their assets properly? But secondly, what can we learn to make sure that we apply that? Should we have a similar?
future are you yet clear who was at fault in the Heathrow blackout well we're waiting for the first report which I think is due in the next few weeks and we'll make our judgment on the back of that but as I say What's top of our mind is our assets being maintained properly and we'll be looking hard at that. And secondly, do we have the right resilience in the systems should something happen to make sure that important sort of sources of demand like Heathrow are proper?
Is that the thing that worries you the most, like in terms of your job and keeping you awake at night? Is it blackouts? Well, actually, look, as I come back to, we have to appreciate we have an incredibly resilient system. preoccupies me, put it that way. My kids keep me awake at night, so I've got something else to occupy me between sort of nine o'clock at night and six in the morning, usually in bed with me. But the thing that I think preoccupies me is the pace of change around it.
So I think where the prime minister is right, it goes beyond economic growth. The economy and the energy economy is changing really fast. So we need to make sure as an institution we keep up with that. We look at new emerging bits of the sector. We get ready to protect customers there. But we also make the most of the innovation and all of the change that's there in practice. And it just comes back to where we start.
you know, we could go back to relying on gas. We could accept that we're just going to follow the gas price that is frankly dictated by other countries.
Or we can embrace this new technology. We can look at the different ways of doing things and ultimately, I think, deliver a much better destination for customers. But that needs a regulator that keeps up with all these changes around it. Do we have... an incredibly resilient system because it wasn't that long ago after Putin invaded that our stock... of gas our reserves of gas fell to dangerously low levels and we actually did begin to see a bit of
the kind of rationing that you see when, you know, essentially we're in trouble. Well, I think it comes back to the point I was making. I think those rehearsals in 22 certainly felt a lot more realistic than they had done before that. But remember, what we have... which not many countries across Europe have, which is ports that bring in what's called liquefied natural gas, so gas on boats, that allows us to be much more resilient than in other circumstances.
So I'm not saying it's perfect. It never will be. You can never guarantee there won't be a security supply crisis. But compared to other countries, given what we have been through, the turbulence that we've seen, we do have a very resilient... That's probably a good note to end things on, isn't it? Yeah, before Spotify, turn our lights out. Yeah, exactly that. Jonathan, thank you so much for your time. Really appreciate that. Cheers.
Absolutely fascinating. Great to see you. Thank you. Thank you. And that's it from us on The Rest is Money. Bye-bye. Goodbye.