Ofgem chairman Martin Cave has warned the energy regulator will not be writing “blank cheques” for low carbon projects as the UK moves to decarbonise its economy.
In a speech at its State of the Energy Market event in London this morning (3 October) Cave discussed the annual report’s findings, including the future costs around decarbonisation.
Specifically he said offloading the costs of decarbonisation onto vulnerable consumers would “undermine” the public support needed to tackle climate change.
He said: “Whether it’s for power generation, transport or heat, we will only support proposals which offer the best value, most effective and fastest route to decarbonisation.
“We won’t be writing blank cheques for network companies or suppliers or green lobby groups who are putting forward a low carbon project.
“Many consumers, particularly the vulnerable, struggle to pay for the last energy bill or next weekly shop.
“Loading excessive, unfair costs of decarbonisation onto their energy bills today to protect consumers of tomorrow could undermine public support needed to tackle the climate crisis.
“Our message is this: Ofgem’s priority, along with the rest of government, is to help deliver a net-zero economy by 2050.
“There will be a cost to do this, but our aim is to keep this as low as possible, affordable and spread fairly.”
The State of the Energy Market report was released alongside Ofgem’s decision on the framework for assessing whether market conditions are sufficient to recommend to the energy secretary to remove the default tariff cap before the end of 2023.
Specifically the framework will assess whether the conditions are in place for “effective competition” in domestic supply contracts.
Ofgem says it expects effective competition to deliver fair outcomes for consumers including not being overcharged, receiving a good quality of service, and having access to a range of energy products and services.
Unveiling the framework at this morning’s event was Maureen Paul, head of analytical strategy and development, who outlined three conditions for effective competition.
They are:
- Structural changes
- A well-functioning competitive process
- Fair outcomes for consumers