A consultation on consultations
The utilities sector is sinking under the weight of consultations, while frustration rises that important decisions remain stymied by the slow hand of bureaucracy. How can we break through the red tape and find a form of engagement that delivers accurately and promptly? The Energy Geeks give their view.
Across the UK energy sector there is growing recognition that the current consultation process is struggling to meet the needs of a rapidly changing energy system. The Energy Geeks raised the need to streamline consultations in our first report: Addressing Waste and Inefficiencies. The recommendations made have since been confirmed and strengthened. It is clear the need is broader than just improving consultations; the approach to decision-making and the role of consultation and other engagement methods would benefit from change – where that change is directed to improving effectiveness, efficiency and pace, all in the interest of achieving better delivery outcomes.
The Energy Geeks are a thinktank partnering with Utility Week on key issues of energy policy. They are: Eric Brown; Maxine Frerk; Simon Harrison; Roger Hey; Laura Sandys; Steven Steer.
The are increasing concerns that consultation processes are becoming too slow, too complex and too resource intensive. Stakeholders describe consultation fatigue. Regulators and policymakers struggle to process increasing volumes of evidence and responses. Multiple consultations address similar or overlapping issues. Industry participants invest significant resources in engagement exercises while often questioning their impact on outcomes. Simply keeping pace with the volume of consultations can be difficult unless organisations have dedicated regulatory teams.
How many times would you read War and Peace in a year?
The scale of formal consultation activity in the UK energy sector has grown to substantial levels. A conservative estimate suggests that DESNZ, Ofgem and NESO alone publish between 5,500 and 15,000 pages of consultation material each year, before taking account of the consultation activity undertaken through Elexon, RECCo, SECCo, the industry code modification processes, licence change consultations and numerous other sector bodies.
Based on recent activity, a reasonable order-of-magnitude estimate is:
*These numbers are drawn from publicly available material
At the midpoint of the estimate, the principal institutions responsible for the UK energy system publish around 10,000 pages of consultation material every year. That is more than twice the length of the entire Harry Potter series, or roughly eight copies of War and Peace. Unlike a novel, however, these documents cannot simply be read. They must be analysed, discussed, challenged, modelled, and translated into evidence-based responses. The burden is measured not just in pages, but in the thousands of expert hours required to engage with them.
The typical response is to ask how consultations can be improved. Can they be shorter? Can they be digitalised? Can responses be analysed more efficiently?
These questions focus on the mechanics of consultation rather than its contribution to better outcomes.
More fundamental questions are often overlooked. Is the purpose of the consultation clear? Are the right questions being asked? Is genuine input being sought, or are stakeholders being asked to validate positions that have already been formed? Are issues being considered in isolation rather than from a whole-system perspective? Is similar information being requested elsewhere? How clear is the relationship between consultation, decision-making and implementation?
These questions are important, but they may still not address the root cause of concern.
The deeper issue is that formal written consultation has gradually become the default mechanism for addressing almost every significant – and sometimes less significant – challenge facing the energy sector. Faced with uncertainty, disagreement, complexity or a lack of evidence, the response is often to launch a consultation.
That places an impossible burden on a single process.
The challenge facing the UK's energy transition is therefore not simply how to improve consultation. It is how to build a decision-making system capable of operating effectively in an environment characterised by complexity, uncertainty and accelerating change, while maintaining a strong connection between decision-making and delivery.
Complicated versus complex
Many traditional energy sector challenges are what system thinkers would describe as ‘complicated’. They have many moving parts but are ultimately solvable.
Building a transmission network is complicated. Designing a market mechanism is complicated. Developing a network price control methodology is complicated. Such challenges require expertise, analysis, modelling and planning. There may be many variables, but the relationship between cause and effect is relatively well understood. With sufficient knowledge and effort, an optimal solution can usually be identified. However, many contemporary energy transition challenges are ‘complex’. Complex problems are different:
- Cause and effect are often only understood in hindsight.
- Behaviour changes in response to interventions.
- Outcomes emerge through interactions between multiple actors.
- Future states cannot be predicted with confidence.
Consumer participation in flexibility markets, adoption of new technologies, evolution of local energy systems and future business models all display these characteristics.
The challenge is not simply finding the answer. The challenge is that the answer itself may evolve as the system evolves.
A second distinction is equally important. Risk and uncertainty are not the same thing.
Risk exists when future outcomes are broadly understood and probabilities can be estimated. Examples include construction cost overruns, asset failures, operational performance and forecast demand ranges. These situations can be analysed, modelled and managed.
Uncertainty is different. Uncertainty exists when future outcomes, probabilities or even the key drivers of change cannot be confidently identified. Examples include the future impact of Artificial Intelligence, emerging consumer behaviours, technology breakthroughs and long-term market evolution. These are not risks waiting to be quantified. They represent futures that cannot be fully known in advance. Energy transition increasingly falls into this category, yet many governance processes continue to treat uncertainty as though it were a form of risk that can be reduced through additional consultation and analysis. Often it cannot.
Failure to understand risk and uncertainty can lead to attempts to eliminate them – to try to create a risk-free or uncertainty-free environment. This is not going to be possible in today’s dynamic energy sector and in addition, will diminish the potential for innovation and the value of emerging, new solutions.
The concepts of complicated versus complex and risk versus uncertainty are related but distinct.
Complicated and complex describe the nature of the problem. Risk and uncertainty describe the nature of our knowledge about the future. Together they provide a useful framework for understanding different types of decision as illustrated in the quadrants:
Historically, the energy sector operated largely in a world of complicated problems and manageable risks – the bottom-left quadrant. This is the environment for which many consultation, regulatory and governance processes were designed. The energy transition is pushing many issues towards the top-right quadrant. This is where traditional approaches become less effective.
This is not an argument for abandoning consultation. It is an argument for recognising that consultation is only one of several tools available to decision-makers.
“This is not an argument for abandoning consultation. It is an argument for recognising that consultation is only one of several tools available to decision-makers.”
A new decision architecture
The future requires a broader approach to governance and decision-making. Rather than defaulting to consultation, organisations should first ask two questions:
- What kind of problem are we dealing with?
- What kind of unknowns are we facing?
These should be answered with an understanding of who is most affected, who may have useful insights, and how can those insights best be obtained?
With this it is possible to choose the most appropriate approach for progressing.
A modern governance system should possess a range of decision-making capabilities, including informing, data gathering, expert review, co-design, deliberative engagement, experimentation and formal consultation. Some issues require evidence. Some require expertise. Some require collaboration. Some require experimentation. Some require consultation. And some simply require a decision to be made.
Most decisions involve some combination of three governance objectives:
- Building legitimacy and trust: ensuring decisions are transparent, fair and socially acceptable, not simply technically correct.
- Managing risk: identifying, assessing and mitigating known or measurable uncertainties.
- Managing uncertainty: building resilience, adaptability and learning where future outcomes cannot be confidently predicted.
The nature of the problem and the unknowns involved should guide the approach adopted.
Complicated problems with predominantly risk-based unknowns are often well suited to technical consultation, expert review, evidence gathering, modelling and analysis. This is the environment for which many traditional consultation processes were designed.
Complicated problems with significant uncertainty may require scenario planning, options appraisal, independent challenge and adaptive decision frameworks. The objective is not to identify a single optimal answer, but to retain flexibility across multiple plausible futures.
Complex problems with predominantly risk-based unknowns often benefit from continuous monitoring, stakeholder engagement, adaptive management and regular review cycles. The focus shifts from optimisation towards ongoing management.
Complex problems with deep uncertainty represent some of the most challenging issues facing the energy transition. In these circumstances, consultation alone is unlikely to provide sufficient answers. More effective approaches may include pilot programmes, regulatory sandboxes, demonstration projects, iterative policy development and continuous learning systems. The objective is not to predict the future, but to learn and adapt as it unfolds.
The value of any decision-making process lies not in the process itself, but in its ability to enable action and improve outcomes. Evidence, engagement and consultation are means to an end. Their purpose is to support better decisions, accelerate progress and strengthen delivery. The relationship between decision-making and implementation must therefore remain strong.
Principles for better decision-making
Whatever approach is chosen, several principles should guide decision-making.
- Be clear about purpose and outcomes. Engagement should be designed to support better decisions and deliver defined outcomes, rather than allowing process to become an end in itself.
- Put customer and societal value at the centre. Decisions should improve consumer outcomes, support affordability, enhance reliability, accelerate decarbonisation and take a whole-system perspective that considers wider interactions, dependencies and unintended consequences.
- Engage the right people, in the right way, at the right scale. Different decisions require different forms of engagement, with participation proportionate to the significance, complexity and impact of the decision.
- Design around participants, not institutions. Consultation should be accessible, efficient, proportionate and worthwhile, minimising unnecessary time, cost and administrative burden for all involved.
- Seek evidence to inform decisions, not to validate predetermined positions. Consultation should be open, transparent and genuinely capable of influencing outcomes.
- Coordinate across organisations. Consultation activities should be aligned to reduce duplication, avoid conflicting processes and enable stakeholders to consider related issues in a coherent way.
The aim should be to create a governance system that is efficient, inclusive and capable of responding to change.
The transition from consultation-led governance to a broader decision architecture should be treated with urgency.
A key first step is to establish a clearer picture of how decisions are currently made. At the risk of proposing a ‘consultation on consultations’, Government, regulators, network companies and system operators should work together to undertake a meaningful review that considers:
- Are we consulting on the right decisions? Which decisions genuinely require formal consultation? Where well-established consensus already exists, could decisions be made more efficiently without additional consultation?
- Is the chosen engagement approach appropriate? What is each consultation intended to achieve? Is formal written consultation always the most effective mechanism, or would workshops, working groups or other forms of engagement deliver better outcomes?
- Is participation effective and inclusive? Who responds to consultations, what influences participation, and are innovators, smaller organisations and consumer representatives able to engage meaningfully?
- Is the process efficient and proportionate? What are the costs and benefits of current consultation approaches, particularly for participants? Where do delays, duplication and bottlenecks arise?
- Is consultation coordinated across the sector? How effectively do organisations align consultation activity to reduce overlap, avoid conflicting processes and make efficient use of stakeholder capacity?
- Does the process support good governance? Are transparency and accountability maintained? Does the consultation process provide decision-makers with the evidence needed to make robust, well-informed decisions?
This would provide an evidence base for reform and help identify where alternative approaches could deliver better outcomes. A much more robust triage process could be developed to establish what needs consultation and what doesn’t. Consultation would remain part of the system. It may even become more valuable because it is used more deliberately and for the issues where it adds the greatest value.
The debate about consultation in the UK energy sector is often framed too narrowly. The issue is not simply that consultations take too long or generate too much paperwork. The deeper issue is that traditional written consultation has become the default response to an increasingly diverse set of governance challenges. In some cases it can even become a substitute for decision-making itself.
As the energy transition accelerates, this approach is becoming increasingly difficult to sustain.
The future requires a broader decision architecture capable of managing legitimacy, risk and uncertainty through different but complementary mechanisms. Consultation will remain an important part of that architecture, but it should not be expected to do everything.
The goal should not be better consultation alone. The goal should be better decision-making – and the time to start building that capability is now. This is needed not just in the energy sector, but more broadly. Maybe energy can lead the way?
