Government defends slow pace of wholesale market reform

The networks minister has defended the government’s slow progress on its Review of Electricity Market Arrangements (Rema) stressing that rushing through reforms would have a “negative impact” on the sector.

The radical reforms of the wholesale market include proposals to decouple electricity prices from those of gas and introduce localised pricing.

The Department of Energy Security & Net Zero (DESNZ) announced earlier this year that it will be embarking on the next phase of consultation on the Rema process in the autumn, more than a year after last summer’s initial exercise.

In an interview with Utility Week last month, RWE UK country chair Tom Glover expressed concern about this slow time scale and the government’s failure to further narrow down the reform options being considered under Rema.

Quizzed by Utility Week at an event organised by the Policy Exchange thinktank on these concerns, networks and nuclear minister Andrew Bowie said: “This is an incredibly complex and complicated area and it’s really important that we take the time to get it right.

“More detail will be brought forward in the autumn. I understand that seems like a long way away but actually it’s only a couple of months away. In reality, we are moving as fast as I think we can with industry so as not to do anything that might have a negative impact on companies and indeed the sector in its entirety.”

But Rema which will carry on after the next general election that must be held before the end of 2024, is “one of the most important things” that the government is doing, he said: “This will be carrying on […] after the next election. This will be carrying on and it’s right that we take our time.

“I understand absolutely the concerns from businesses within the sector, but it is precisely because we are cognizant of the inherent risk in terms of moving faster on this for those businesses that we’re taking our time to do this properly and do it right because Rema is something that must be done right.”

Bowie also said that he is “determined” to pass the Energy Bill, which is midway through detailed scrutiny by the House of Commons, before the current Parliamentary session ends in late July.

He also told the event that he expects to see no overlaps between the functions of Ofgem and the Future Systems Operator, which he expected to be up and running next year.

And the minister played down concerns that the US government is stealing a march on the UK with the vast range of tax breaks and investment for low carbon infrastructure unveiled in its recently passed Inflation Reduction Act.

He added: “Of course, we’ve got to ensure capital investment in the tech and the skilled labour force doesn’t migrate across the Atlantic but the reason the Americans are throwing hundreds of billions of dollars at these projects is because they haven’t done it in the last 20 years.”