MPs attack Ofgem as stuck in 20th century

Influential MPs have published a scathing report attacking power industry regulator Ofgem and power companies for being behind the times.

Today (February 23) the Energy and Climate Change Committee has called for ‘strategic leadership’ to take the UK away from ’20th century fossil fuels’ to a modern smart gird.

The committee is ‘extremely disappointed’ at the industry’s failure to agree a new transmission access regime to tackle the queue of 60 GW of generation, a large proportion of which is renewables, waiting to connect to the grid.

It also raises specific ‘concerns’ about Ofgem for granting funding for new grid investment projects ‘before the completion’ of a review of how better use can be made of the existing network.

Launching the report The Future of Britain’s Electricity Networks, Paddy Tipping MP, said: “Our existing regulatory and policy frameworks, along with the grid infrastructure we currently rely on, were developed to serve the fossil fuel economy of the twentieth century.

“The future looks very different. By 2020 the UK electricity network will need to accommodate a far more diverse energy mix that includes a much higher proportion of renewables that cannot respond so easily to fluctuating demand.

“The only cost-effective response to these developments is the creation of a smart grid that intelligently manages demand and supply across the energy system.”

It also highlights the increase in the cost of managing electricity flows across the system in recent years, and finds this is caused by ‘inherent flaws’ in the British Electricity Trading and Transmission Arrangements (BETTA).

The report also notes allegations ‘that anti-competitive practices’ by certain electricity companies may also have contributed to increasing costs.

However, the report does welcomes the government’s decision to enhance Ofgem’s powers to regulate companies in the current Energy Bill and calls for a specific review of the BETTA market.

The committee also called on Ofgem ‘to do more’ to make sure the regulatory framework provides the incentives to invest in skills, and for the industry to play its role.

A spokeswoman for Ofgem agreed network access reforms were needed.

She said “We have sought to change the arrangements but have met strong resistance from parts of the industry, this is why we referred the issue to Government so it can take legislative action.

“We take our sustainability duty very seriously and have approved major increases in network investment to connect more renewables.

“Before approving any investment we carefully scrutinise network companies’ plans and consider whether investment could be avoided through using new technology or better use of the existing network.

“We share concerns over increasing costs for managing the network and allegations of anti-competitive practices.

“We have sought additional powers to tackle market abuse which are being taken forward in the Energy Bill.

“National Grid has been looking at ways of reducing these costs and has tabled proposals which we are now closely considering.”

Luke Walsh

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