Industry veteran joins Ofgem

Macquarie Capital’s Simon Wilde tells us about the newly created, investment-facing role, as the UK energy watchdog warns investors to brace for ‘significantly lower returns’.

Simon Wilde

Simon Wilde, an industry veteran with 26 years of investment-banking experience, has left Macquarie Capital to join UK energy regulator Ofgem as a senior financial advisor.

The newly created investment-facing role will cover all of the UK’s regulated networks, as well as energy system operators, and will see Wilde provide financing and investment input into Ofgem’s ongoing work, such as the RIIO-2 pricing review.

“All of [Ofgem’s policy work] has financing implications and all the decisions the regulator takes have consequences for companies. I’m here to look at [those implications] from an investment perspective,” Wilde told Infrastructure Investor. He will also manage the regulators’ 15-strong regulatory finance team, reporting to Jonathan Brearley, executive director of systems and networks since April.

Wilde joins the energy watchdog as it promises a “tougher regulatory framework” from 2021, warning investors to brace for “significantly lower returns”. Ofgem said in March the cost-of-equity range – the amount the networks pay their shareholders – should be between 3 percent and 5 percent, while it is also considering changes to the cost of debt so that customers benefit from a fall in interest rates. The proposed equity range changes would be the lowest rate ever proposed in the UK, Ofgem added.

Reaction to the latter has not been all positive, with the UK’s National Grid stating in its annual report, released in May, that Ofgem’s proposed cost of equity range is “too low for the risk of a transmission company and will not offer adequate return for investors”.

Prior to leaving Macquarie Capital, where he spent over seven years and departed as a senior managing director, Wilde was head of power and utilities at RBS/ABN Amro. He also gained experience at JPMorgan, Credit Suisse and Creditanstalt. He continues to be a visiting lecturer and research fellow at Imperial College Business School.

During his time as an investment banker, Wilde advised on deals with a total asset value of close to $100 billion across the energy and utilities value chain. That included acting on behalf of most of Europe’s major utilities, such as Centrica, EDP, National Grid, E.ON, Endesa/Enel, Iberdola and Vattenfall, as well as for governments in Western and Eastern Europe.

So, what prompted Wilde to quit investment banking? “I had been a part-time banker and academic researcher for the past five years and my research was taking me more and more into policy areas and engaging with people in the energy markets. The idea of having an investment-facing role at a regulator seemed like a nice combination of my academic and investment backgrounds,” he said.