Government and Ofgem need new vision for retail market

The government and Ofgem need a new vision for the energy retail market if it is to come out of the current crisis stronger, a senior Energy UK figure has argued.

Simon Markall, the trade body’s deputy director of external relations, was speaking at Utility Week’s recent Adapting for Net Zero conference and gave his views on the current state of the market.

Criticising the government’s energy retail strategy Markall said: “It has 2015 solutions to a 2010 problem that will only be delivered in 2027.”

The strategy, published in July, was heavily focused on introducing new switching propositions for consumers. Markall said the emphasis should instead be on innovation and introducing new products and services.

“We need to get round the table with the government and the government needs to get round the table with us to deliver a proper retail strategy, a proper vision for the future of energy retail; one that supports customers in propositions to get to net zero, one that incentives companies to deliver innovation and one that ultimately helps customers and the industry meet net zero,” he stated.

Markall was asked whether he agreed the continuing crisis in energy will put the market in a better place by reducing the focus on switching, as recently suggested by Martin Young, a senior analyst at Investec.

He responded: “We can come out of this stronger but not in the current vision of what we get from the government and Ofgem.”

While Ofgem did not respond directly to Markall’s comments, the regulator did point to the recent letter by chief executive Jonathan Brearley to suppliers in which he outlined a series of measures Ofgem will take to combat market volatility.

“We also recognise there is a case for wider and deeper changes to ensure that the energy sector is resilient against potential continued global market volatility, and is able to deliver the transition to net zero in consumers’ interests,” Brearley said in the letter.

A spokesperson for the Department for Business, Energy and Industrial Strategy (BEIS) said: “We are committed to building a resilient, competitive retail energy market that protects consumers and encourages suppliers to invest in innovation, ensuring both consumers and suppliers are able to move towards more low carbon energy.

“Our Energy White Paper will drive the historic transformation of the UK’s energy system for a greener future – including fully decarbonising our electricity generation by 2050, and we are already looking at amendments to retail market regulation to accelerate the sector’s progress towards net zero through the 2020s.”