UK parliamentary committee launches Ofgem probe
The upper house of parliament has launched an inquiry into the role of energy regulator Ofgem, it said June 23. The process began with a cross-examination by the Industry and Regulators Committee of two academics the previous day, delving into the wide-ranging tasks Ofgem has to juggle and whether it had the powers needed to drive the govermment's net zero carbon ambitions.
"Ofgem oversees the UK energy market, which will play a key role in the UK's transition to net zero emissions by 2050. The committee will scrutinise Ofgem's role in the wider energy system and its relationship with government and parliament, how Ofgem's regulation interacts with net zero transition, and how net zero impacts Ofgem's other objectives, including affordability and a secure energy supply," it said.
The committee invites evidence on a number of issues including Ofgem's role in the wider energy system; its statutory objectives, duties and powers; and its relationship with government and parliament. A second hearing will take place June 29 where the committee will hear from other energy experts.
The committee's chair, Lord Hollick, said the inquiry "kickstarts the committee's scrutiny of the UK's regulators. Ofgem regulates the UK's electricity and gas markets, giving it a key role in overseeing a sector that is crucial to meeting the UK's net zero target. The target is likely to lead to an even greater role for electricity in sectors such as heating and transport, increasing demand and potentially putting greater pressure on Ofgem to provide reliable, green energy without an unaffordable increase in energy prices. The inquiry will look at Ofgem's role in the net zero transition, scrutinising its regulation in relation to the target and the potential impacts on energy consumers and the wider energy system.
"The inquiry will also consider what the net zero target means for Ofgem's responsibilities across a broad range of issues, including a secure energy supply, affordability and customer protection, particularly for vulnerable customers. The inquiry will look at Ofgem's duties and powers and its relationship with the Government, aiming to ensure that Ofgem has clear objectives and the powers to meet them," it said, appealing for views from the wider public.
The upstream regulator Oil & Gas Authority has already had its remit extended from maximising the economic recovery of the UK continental shelf's hydrocarbons, to achieving net zero carbon, which will make it more expensive to achieve the former goal through greater electrification and so on. Plans to develop the Cambo heavy crude oil field, yet to receive regulatory approval, have also angered environmental groups in the run-up to the COP 26 talks late this year.