Change is inevitable. Change is constant. 

Laura Petrie, Parnter, Brodies.

In the late 19th century Benjamin Disraeli stated that change is both constant and inevitable, and it has never been a truer statement than today when considering the UK energy industry.

The more things change, the more they stay the same?

However, as we move into 2023, none of the changes and challenges being faced in the current market are new. The industry has come through wars in the 1980s and 1990s, it has survived market peaks and crashes in the same period, it has confronted supply and demand issues including living through blackouts and shortages in the 1970s, and it has experienced regulatory change as a constant and  inevitability throughout.

Ensuring that a business survives through changeable times is dependent, in part, on conducting legal housekeeping and health checks regularly.

Small changes make a big difference

What simple things can help insulate a business against change?

• Annual review of contracting practices and policies, including a review of live contracts, helps to keep a company at the top of its game when managing risk and liability. Frequently, overarching framework agreements are put in place between operators and suppliers which are then relied on for extended periods of time with limited further review. While there is a benefit to the stability these agreements bring in respect of pricing, all too often they will have been negotiated by team members who have moved on and may even be frequently ignored in favour of bespoke terms being used for individual projects. This leads to extra time and costs being incurred and varying terms and conditions applying between the same parties. Conducting a contract audit on a regular basis can help clear out old terms and highlight where amendments may be required, ensuring that if the market changes, the company's preferred terms are in place.
• One of the most important assets a company has is its people. Utilising the right engagement structures ensures that good people can be retained and rewarded appropriately. Similarly, where issues arise, the appropriate structures mean that these issues can be addressed swiftly. Using standardised engagement tools (such as Workbox by Brodies) can ensure consistency and a clear process for those in people management as well as a transparent approach for all team members.
• Environmental, social and corporate governance became energy industry buzzwords in the last five years as investors and the general public sought greater transparency and accountability in the actions of energy related businesses. Establishing clear policies in relation to environmental and societal matters ensures that an organisation can effectively manage its public image while coordinating its activities in a strategic manner. Internal management and application of those policies is equally important and clarity on governance documents (such as company articles, shareholder agreements or directors' engagement letters) ensures that decision making can be carried out efficiently. Auditing and reviewing these policies and internal documents annually ensures an organisation remains agile and responsive.
• Management of international strategy can play a key part in addressing changes. Whether it is in establishing overseas markets or streamlining existing international portfolios, understanding the local market and local laws means an organisation can make timely and cost-effective decisions. Ensuring that the right contacts and local support are in place as early as possible means that when the inevitable changes occur, no time is lost.

The times they are a-changing

Bob Dylan got it right when he narrated the changes the world faced in the mid-1960's and the world is  facing similar changes now. As often as things change, there is very little that is wholly new. Instead, change comes in cycles.

So, as 2023 looms, we can draw comfort that similar issues to those the energy industry faces today have happened before. Effective planning and preparation can help us all stay ahead of the curve and meet those changes head on.

Read the latest issue of the OGV Energy magazine HERE