Call for evidence launched on Ofgem’s role in net zero

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A new inquiry by the Industry and Regulators Committee will consider Ofgem’s role in the transition to net zero and whether changes are needed to its objectives and powers or its role in the wider energy system.

Having initially focused on protecting the interests of consumers, Ofgem has increasingly been given responsibilities in relation to other areas, particularly the security of the UK’s energy supply and decarbonisation.

In the Energy White Paper, the Government committed to including a requirement for Ofgem to carry out its regulatory functions in a manner consistent with securing the Government’s policy outcomes, including “delivering a net zero energy system while ensuring secure supplies at lowest cost for consumers”, in its proposed Strategy and Policy Statement for Ofgem.

The inquiry will also examine how net zero relates to Ofgem’s other responsibilities such as affordability and the security of the UK’s energy supply, how Ofgem considers the interests of consumers, and Ofgem’s relationship to Government and Parliament.

The Committee’s call for evidence asks the following questions:

  • What role should Ofgem play in the transition to net zero? What changes, if any, should be made to its remit, responsibilities and resources?
  • How well does Ofgem balance environmental objectives against its responsibilities in relation to affordability for consumers?
  • How well does Ofgem fulfil its obligations to consumers? Does Ofgem take consumer views into account sufficiently, particularly those of vulnerable consumers?
  • What implications will the transition to net zero have for the security of the UK’s energy supply? How does Ofgem currently manage issues relating to security of supply?
  • Is Ofgem’s current system of price controls appropriate? Does it provide sufficient incentives to invest in the context of the transition to net zero?
  • Is the current system of governance for the UK energy market appropriate to secure the Government’s policy outcomes? What improvements could be made and what role should Ofgem play?
  • Are Ofgem’s duties and powers appropriate and sufficiently clearly defined? Do Ofgem’s objectives conflict and, if so, how should any conflicts be managed?
  • Is Ofgem’s relationship to Government and Parliament appropriate? Are there issues related to the split of responsibilities, transparency or accountability?
  • How does Ofgem compare to similar bodies internationally? What lessons can be drawn from the experience of other countries or jurisdictions?
  • Are there any other aspects of Ofgem’s work that the Committee should consider?

The deadline for written submissions is Sunday 22 August 2021.

More information about this call for evidence and how to take part is available on the UK Parliament website.