Increasing Ofgem powers could drive more innovation, MPs conclude

Innovation in the energy sector could be increased by giving Ofgem more powers, according to a committee of MPs.

The Energy & Climate Change Committee has published its report into the UK Government’s draft legislation on energy, which was unveiled in January.

Giving energy regulator Ofgem the powers to alter industry codes – rather than waiting for companies to suggest changes – could increase innovation, the committee concluded.

MPs think the new powers could also lower bills by making it easier for consumers to switch supplier more quickly and by ensuring suppliers match the amount of energy they buy against the amount customers actually consume.

Impact assessments

Angus MacNeil, Chair of the committee, said: “The Government’s draft legislation is a step in the right direction.

“The energy industry has for too long been able to decide when to change the way it engages with the energy market. This has not served consumers well.

“Giving Ofgem the power to initiate these code changes should put the needs of customers front and centre.

“But in the interests of clarity and transparency, we believe that Ofgem should publish an impact assessment of any changes it proposes to make.”

Competitive tendering for offshore wind

The draft legislation would also allow Ofgem to run competitive tenders for the design and construction of onshore transmission assets, including overhead lines, underground cables and substations.

MacNeil added: “We have concerns about the potential delays to projects created by the tendering process, so we suggest that when Ofgem makes a decision about tendering it once again publishes an impact assessment so that industry, communities and consumers are able to understand the reasons behind the decision Ofgem has reached.

“This will ensure once more that bill payers remain the focus of the Government’s proposals.”

> Download the report