Ofgem and the Energy System

Is the climate right for overhauling UK energy regulation?

Should Ofgem be making a low-cost system as sustainable as possible, or should it be making a sustainable energy system at the lowest possible cost?

Ofgem has been successful in its role as a regulator, ensuring the efficient operation of the gas and electricity markets and an affordable energy supply. However, during recent years there has been a dramatic change in the energy landscape, with an increasing focus on climate change and energy security.

We believe that achieving a reduction in greenhouse gas emissions should be made central to Ofgem's remit in order to meet the needs of future consumers.

Our review of the role of Ofgem - Lost in Transmission? - has revealed a number of key opportunities for government to achieve a significant shift in its efforts to reduce UK carbon emissions through electricity and heat generation, transmission, distribution and use.

Our recommendations include:

� Bringing energy and environment policy together under one Secretary of State

� Changing Ofgem's primary duty to reflect the compelling need to move to a decarbonised energy system

� Providing consumers with better information through smart metering and billing to help them make decisions about their energy consumption

� Changing the current market arrangements to make it easier for smaller, low carbon generators and suppliers to compete in the markets

� Introducing a greenhouse gas incentive package into the Price Control Reviews for the distribution and transmission networks to reduce losses and facilitate the connection of low carbon generation

Publications

Main Report
Lost In Transmission? - The role of Ofgem in a changing climate
The SDC in-depth review of Ofgem, published 19th September 2007.

Press release also available.

Evidence Base Papers
Paper 1 - A review of consumers' attitudes to energy
Paper 2 - Evidence of steps towards a sustainable energy system in other countries
Paper 3 - Options for changes to the regulatory framework required to deliver a sustainable energy system in Great Britain

Our Methodology
The engagement programme for this review comprised a series of interviews with a range of individuals in the industry, including Ofgem staff and Authority members, academic experts and NGOs. Our own desk based research was supplemented with the consultants' reports above. We would like to thank all contributors to this review particularly Ofgem, who have allowed us to work closely with their staff, helping us to understand their thinking and decision making processes and the members of our External Advisory Group and Government Reference Group.

Ofgem Opinion Pieces

As part of our work we published a series of short opinion pieces reflecting the issues that have arisen during the review and our thinking about these issues, written by Bernie Bulkin, SDC Commissioner for Energy and Transport.

The purpose of these was to solicit comment from a broad array of stakeholders that would inform the outcome of the overall review.

The Role of Ofgem by Bernie Bulkin

Opinion Piece 1: Ofgem - Looking back, looking ahead

Read your comments �

Opinion Piece 2: A Sustainable Energy System and Barriers to Achieving it

Ofgem response to opinion piece 2

Read your comments �

Opinion Piece 3: Heat and Cooling

Ofgem response to opinion piece 3

Read your comments �

Opinion Piece 4: Consumers and Efficiency

Read your comments �

More information on Ofgem and its role can be found can be found on its website at www.ofgem.gov.uk.