Ofgem and Ofwat growth duty rubber stamped

Ofwat and Ofgem will be responsible for ensuring economic growth in their respective sectors, after the government approved reforms to their respective regulatory frameworks.

It means that both regulators will have to ensure that all decisions made do not impede economic growth within the water and energy sectors.

The reforms will be implemented into both regulatory frameworks as well as that of Ofcom, taking effect from April.

It brings the three economic regulators in line with 40 other bodies as part of wider reforms by government to tighten up regulation.

The changes were first tabled in July last year before being committed to within the Autumn Statement.

For Ofwat, the reform will “facilitate even more pro-growth activity,” according to the government’s consultation document.

For Ofgem, it is intended to build on work done to encourage innovation in areas such as electric vehicles, storage and flexibility services.

The government’s decision document adds that the growth duty will not supersede existing regulatory duties relating to environmental protections.

It explains: “The government has considered the issue and has concluded that it is not expected the extension of the Growth Duty to Ofcom, Ofgem and Ofwat will cause environmental harm. The Growth Duty does not override the existing environmental protections to which these three regulators must conform.”

Business secretary Kemi Badenoch said in May that the reform was under consideration as part of government’s policy on ‘smarter regulation to grow the economy’. This focuses on the role of regulators in supporting an economy that attracts businesses, supports innovators and provides better outcomes for households and consumers.