Announcement

Huhne: Strong, independent, regulator crucial for secure, low-carbon, affordable energy

DECC published the conclusions of two reviews today that aim to support the delivery of energy and climate change goals by strengthening the…

DECC published the conclusions of two reviews today that aim to support the delivery of energy and climate change goals by strengthening the way regulation is carried out in the gas and electricity markets, and improving delivery of DECC programmes.

The Ofgem Review proposes new legislation for government to set high-level strategic goals that the energy regulator will play a part in meeting. DECC’s Delivery Review will result in increased accountability and help maximise value for money for the delivery of DECC programmes.

Energy and Climate Change Secretary The Rt Hon Chris Huhne MP said:

“A strong, independent regulator will be crucial to building the secure, affordable, low-carbon energy we need. Long-term certainty is vital too. We are proposing to set clear goals which Ofgem must play its part in meeting, so that industry and consumers know the rules of the game.

“Today we are also reshaping how our delivery bodies work for us, to ensure more accountability and maximum value for money.”

Ofgem’s Chairman, Lord Mogg, welcoming the findings of the review, said:

“The emphasis DECC’s review places on the value of a strong, independent regulator is welcome. It underlines how important to investors a stable and predictable regulatory framework is to ensure that the £30 billion of investment for Britain’s energy networks is delivered in the decade ahead. Consumers too need confidence in the energy market. Our Retail Market Review will provide still more assurance that protecting their interests is Ofgem’s core role.

“We also welcome the Delivery Review’s assessment of Ofgem E Serve’s achievements. Both Ofgem and E Serve will continue to play their part in meeting the formidable challenges the country faces on energy and climate change.”

The Ofgem Review reaffirms the Government’s commitment to a strong, independent regulator able to give confidence to investors, protect consumers and help meet our energy and climate targets.

The review proposes to strengthen the current system by bringing greater clarity and coherence to the roles of both government and the regulator. This will mean:

  • Ofgem will continue to regulate independently of Government;
  • Government will communicate more clearly the respective roles of Government and Ofgem, including clear strategic goals set out in a new statutory strategy and policy statement; and
  • Ofgem will set out annually how it plans to deliver its contribution to the goals and how it will monitor progress, providing greater transparency and accountability to the public.

The Delivery Review outlines a number of measures to help ensure DECC is able to respond to the future delivery challenge.

This will mean:

  • for new programmes, unless there is a clear case for placing delivery with a third party, delivery will be led by DECC to ensure accountability to ministers, but with aspects of delivery contracted out, where possible and appropriate, to provide maximum value for money;
  • improved governance for the delivery of existing DECC programmes, to help maximise value for money and provide better oversight by DECC ministers;
  • focusing delivery of our energy efficiency objectives through the Green Deal, competitively tendering where possible the services that will underpin it. Following the end of core grant funding for the Energy Saving Trust and Carbon Trust from 2012/13, DECC expects both organisations to compete for those services put out to tender and continue to develop other commercial opportunities; and
  • a new Office of National Energy Efficiency will be established within DECC to provide a wider energy efficiency strategy, strong programme management, and a cohesive view of DECC’s customer facing policies.

Notes for editors

  1. The Delivery Review was announced by the Secretary of State in the July 2010 Annual Energy Statement, which stated that DECC would consider how best to streamline delivery of the functions needed to meet its energy and climate change objectives and publish its conclusions.
  1. The Ofgem Review of the energy regulatory framework fulfils a Coalition Agreement commitment. The review was launched in July 2010 in the Annual Energy Statement with the publication of a call for evidence that sought views on the issues that the review should tackle. A summary of the responses was published in December 2010.

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