Fresh retail energy market legislation may be on the cards before the next election as the result of a government review, details of which emerged yesterday (5 March).

A policy paper setting out more details on the energy retail market review, initially announced by secretary of state Greg Clark last November, was published on the Department for Business, Energy and Industrial Strategy (BEIS) website.

It says that the review will be jointly carried out by the government and Ofgem with a consultation document on potential options expected by the summer of this year.

Progress on the review will also form part of the energy white paper, which is due to be unveiled “later this year”.

And the government will legislate in a “subsequent session of this parliament” if new powers are required to implement the conclusions of the review, which is designed to lay the foundations for a post-price cap retail market from 2023 onwards.

The paper states that the review will cover barriers to innovation, default supply arrangements for consumers who do not engage in the market and protections for energy customers.

It will look at measures that can be put in place to reduce barriers to innovation and open up the market to new types of propositions.

The exercise will join up with existing work programmes of Ofgem and the government, the review of energy industry codes and codes governance, and BEIS’ energy data taskforce.

The paper states that the review will build on work already carried out by Ofgem on future supply market arrangements, which concluded last summer that there is a “strong case” for “fundamental change” of the market because the existing regulatory framework is preventing new innovative businesses from entering the market.

Ofgem found that the current retail market design is not fit for purpose and is “overly complex and burdensome, stifles innovation and the development of new business models to the detriment of consumers.”

It said: “Energy is an essential service and we need to ensure all consumers can access a reliable supply of gas and electricity at a reasonable price, with an appropriate level of service.”

An Energy UK spokesperson said: “The energy system is undergoing a rapid transformation, and the future energy retail market will look markedly different from today’s.

“So, we need a market framework that can continue to encourage innovation and secure investment, whilst ensuring a level playing field between competitors and protecting consumers.

“The energy sector is not just embracing this change, it is leading the charge and the opportunity to deliver for customers, the economy and the environment. The industry is keen to work with government and Ofgem to deliver this framework, and we will shortly be publishing the Future of Energy which looks at the future energy system from a consumer perspective and how it could be achieved.”

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