Ofgem's regulatory role under review
The Department for Energy and Climate Change ("DECC") is reviewing the Office of Gas and Electricity Market's ("Ofgem") regulatory role in order to determine whether this needs to be changed in any way. In particular, the coalition government is keen to ensure that the regulatory framework for the energy sector is aligned with the government's strategic energy policy goals.
Amongst other things, the review will consider the boundary of responsibilities between Ofgem and the OFT (with a view to providing a stable and predictable regulatory regime) and between the work of Ofgem and the government (in particular to apportion accountability for strategic choices). It will also examine Ofgem's statutory duties, the value for money it provides and its approach to minimising the burdens of its regulatory activity.
DECC refers to the significant challenges ahead for the energy sector and the critical role that Ofgem will play as independent regulator. DECC refers in particular to the aim of substantially reducing carbon emissions (to an 80% reduction in emissions by 2050); increasing the use of renewable technologies (in line with the EU target of 15% renewable energy by 2020); maintaining security of supply while still ensuring that consumer bills are minimised and the need for substantial investment in new network and generation infrastructure.
The review follows the announcement by the coalition government in the final coalition agreement that it would reform energy markets to ensure fair competition including a review of the role of Ofgem. Ofgem's Chief Executive, Alistair Buchanan, said that Ofgem very much welcomes this holistic review and the confirmation that Ofgem is 'a critical part of the energy landscape'.
Evidence is invited by 24 September 2010. DECC intends to report on the results of its review in spring 2011 at the same time as a White Paper on Electricity Market Reform.
To view Community Week, Issue 483; 6th August 2010 in full, Click here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
