Policy & regulation

Latest updates and analysis on how government and regulators' decisions will impact the sector 

Latest in Policy & regulation

Small firms should have their energy standing charges frozen this winter and have access to a 14-day contract cooling off period, a trade body has urged. The Federation of Small Businesses (FSB) has released its latest Small Business Index which shows that utilities are a cost driver for a majority of small firms, with more than 57% citing utilities as the main cause for rising business costs in Q3 this year, down slightly from 62% the previous quarter.
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Any move towards locational market pricing could stunt investment in major new wind projects in Scotland, the government has been warned. According to the Scottish Future Trust, the proposal to reform electricity market arrangements “risks a long period of hiatus in significant new renewable electricity generation, at a time when a huge increase is required”.
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The government has been accused of “breaking promises to the most vulnerable in society” after not delivering proposals for an energy social tariff first outlined a year ago. Jeremy Hunt first acknowledged the need to examine targeted bill support in last year’s autumn statement with a consultation planned for this summer. But both Conservative and opposition MPs have now lamented the lack of action.
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Rishi Sunak has sent out “mixed messages” by relaxing the phase out of petrol and diesel cars and vans until 2035, while maintaining targets for motor manufacturers to make electric vehicles, Chris Stark has warned. The Climate Change Committee chief executive said the relaxation of the previous 2030 EV target was one of the two aspects of the prime minister’s September net zero announcement he was “most worried” about.
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The Department for Business and Trade has said it wants to stimulate competition within the water sector through streamlined regulation as well as delegating some of Ofwat's powers around the non-domestic market.
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Environmental regulation in Wales came under fire from politicians at a select committee hearing where witnesses described a cultural aversion to enforcement at Natural Resources Wales. The organisation's CEO said prosecution indicated regulation had failed and did not benefit the environment.
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The government has revealed plans to hold a “thorough review” of economic regulators’ duties, including those of Ofgem and Ofwat, to ensure they remain fit for purpose. The Department for Business and Trade said the expansion of their duties over time has made it harder for regulators to manage priorities and trade-offs as tensions arise.
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The government has insisted its proposed £1.5 billion package of payments to communities hosting grid projects will have only a negligible impact on wider bills, while also admitting it offers only a slightly better than even chance of thwarting delays.
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The annual application windows proposed by the Electricity System Operator as part of long-term reforms to the connections process may not work for some types of projects, the government and energy regulator have cautioned. The comments were included in the six-point Connections Action Plan issued by the Department for Energy Security and Net Zero (DESNZ) and Ofgem.
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Are current approaches to ensuring company financeability incentivising short-term thinking and are current regulatory frameworks fit for purpose? In the first of a series of exclusive articles, Sam Williams, director of Economic Insight and a member of the CMA’s Cost of Capital Panel, explores these questions and outlines his vision of the financeability blueprint.
Analysis
Rising wholesale energy costs will lead to a 5% price cap increase for consumers in January, Ofgem has confirmed. In its latest quarterly cap update the energy regulator has also unveiled plans to level standing charges for prepayment meter (PPM) customers to end the so-called PPM premium.
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Jeremy Hunt has announced that new electricity generation will be exempted from the government’s windfall levy on the sector, while unveiling a wide-ranging package of energy infrastructure planning changes in his Autumn Statement. The statement, widely reckoned to be the last before the next general election, contains a series of announcements on reforming the planning system and speeding up electricity grid connection timetables.
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