Today I am publishing the conclusions of the Ofgem Review.
The Coalition Programme for Government committed to a review of the role of Ofgem. The Annual Energy Statement last July announced the terms of the review, which focussed on Ofgem’s role in regulating the gas and electricity markets, and that conclusions would be published in Spring 2011.
The Review has concluded that the current system should be strengthened to bring greater clarity and coherence to the distinct roles of Government and the regulator:
- Ofgem will continue to regulate independently of Government;
- Government will set out a strategic policy framework for the energy sector and will define those strategic goals to which Ofgem should contribute. The Government will seek legislative provision to require Ofgem to take its independent regulatory decisions within the context of these goals, which will be set out in a new statutory ‘Strategy and Policy Statement’. Approval from Parliament will be sought before the Statement takes effect;
- Ofgem will set out annually how it plans to deliver its contribution to the goals and how it will monitor progress, in order to increase transparency and accountability.
A summary of the conclusions is available and a full report will be published with the electricity market reform White Paper, before the summer recess.
I am also publishing today the conclusions of DECC’s Delivery Review, which will help DECC respond to future delivery challenges.
Governance of existing programmes has been reviewed and, where appropriate, changes introduced to improve it. For new programmes, unless there is a clear case for placing delivery with a specific third party, delivery will be led by DECC itself to ensure accountability to Ministers, but with administrative functions contracted out, where possible and appropriate, to provide maximum value for money.