Ofgem hits back following criticism over remit

Ofgem has issued a statement reaffirming its commitment to tackling climate change after the Confederation of British Industry (CBI) criticised the regulator for failing to give enough weight to environmental concerns when setting new rules. 

The CBI called for Ofgem’s remit to be updated to prevent it becoming a barrier to progress, warning that the regulator has already sent “negative signals” to investors by prioritizing other issues. 

“We believe that Ofgem should be supported with new statutory duties to enable prioritisation of decisions that promote clean growth and progress towards net zero, alongside fair competition and value for money to consumers,” a spokesman for the trade body told The Guardian. 

The CBI highlighted Ofgem’s proposed reforms to residual network charges, which according to Aurora Energy Research could delay the advent of subsidy-free renewables by up to five years, as an example of where the effect on consumers bills has been prioritised over decarbonisation.

“Industry is concerned about the impact this will have on securing the urgent investment needed in a range of low-carbon technologies”, the spokesperson added.

However, in a response published on its website, Ofgem said this criticism “ignores the fact that Ofgem’s principal duty, enshrined in statute, is to protect the interests of energy consumers both now and in the future, including from damaging climate change by reducing greenhouse gases.

It continued: “Ofgem’s regulation of Great Britain’s energy networks has facilitated the huge expansion of renewable electricity generation over the last decade and we are working with the government and other stakeholders to help decarbonise how we heat our homes and businesses and transport, particularly through electric vehicles.”

The regulator also drew attention to its recently released corporate strategy, which includes a commitment to help achieve the net-zero goal at the lowest cost to consumers, before adding: “Ultimately, government is responsible for setting the policy for the energy sector and proposing any changes to Ofgem’s statutory framework.”

A spokesman for the Department for Business, Energy and Industrial Strategy said there is no need for a change to Ofgem’s remit: “We are confident that Ofgem have a firm focus on cutting carbon emissions from energy as one of its three main objectives, as outlined in its strategy last week.

“We are the first major economy to introduce a legally binding net zero target, and Ofgem has the powers it needs to contribute towards that.”