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Ofgem and Energy Regulation

 In 2007, the SDC report Lost in Transmission recommended that Ofgem’s focus should be on creating a sustainable system which costs as little as possible, rather than making a low cost system as sustainable as possible.

A year later, the 2008 Energy Act amended Ofgem’s duty to clarify its sustainable development objective, making it clear that the principal objective to protect the interests of consumers included future consumers, not just current consumers. The 2010 Energy Act went further, making it clear that Ofgem must:

• include the reduction of carbon emissions and the delivery of secure energy supplies in their assessment of the interests of consumers
• step in proactively to protect consumers as well as considering longer term actions to promote competition.

Responses to other recommendations in this report include:

• The roll-out of smart meters to allow householders to manage their energy consumption is due to be completed by 2020
• Transmission access has been reformed to enable smaller, low-carbon generators and suppliers to connect to the grid more easily
• A Renewable Heat Incentive is planned to come into force in April 2011 as part of DECC’s heat and Energy Saving Strategy
• This has also led to a restructuring of Ofgem itself in September 2009, a key outcome of which was the creation of a new Sustainable Development Division, which the SDC warmly welcomed. This new division will help to bring together Environmental, Social and Consumer Policy, along with enforcement, and help Ofgem to meet its duties to promote sustainable development in the energy market.
• Energy and climate change have been aligned under one Secretary of State since 2008

Further information on Ofgem and its role can be found on its website at https://www.ofgem.gov.uk/Sustainability/Pages/Sustain.aspx.