Cutting Red Tape

Sector review Energy

Review findings now published

After speaking to wide range of businesses, from large and established energy companies to innovative start-ups, we were told that the most significant burdens in the sector were driven by regulation and enforcement, which is overlapping, duplicated, and not specific enough or not designed from the perspective of how it may place burdens on businesses.

The report from the Cutting Red Tape review of the energy sector has now been published, including the Government’s response.

Taking on board all the evidence received, the Government is committed to a programme of reforms that will develop a clear approach to policy, creating a more joined up approach to regulation, simplifying processes and rules while adopting a more risk-based approach to compliance.

The Cutting Red Tape energy review asked businesses to tell us where regulation or the enforcement of regulation was causing unnecessary burdens and problems. We spoke to a wide range of businesses, from large and established energy companies to new starters and small and medium enterprises.

Comments are now closed

Key outcomes:

• Following the publication of the CMA report in Spring 2016, DECC aims to designate a Strategy and Policy Statement. This will set out in detail the respective roles of DECC and Ofgem, and will provide a strategic framework within which Ofgem are to operate.

• DECC will consult on the storage of electricity in the network in spring 2016. DECC is working closely with Ofgem to examine how existing legislative ambiguity, such as being licensed as generation, can negatively impact storage projects.

• DECC and Ofgem have committed to find ways to streamline data and information requests, and are forming a working group to deliver this. DECC and Ofgem accept that fewer, more comprehensive requests and better sharing might remove pressure on businesses.

• The CMA is currently investigating, as part of its market investigation, the governance of the Industry Codes and is due to publish its final report in June 2016. Once this is released DECC and Ofgem will look at how code governance can be streamlined, in line with these findings, to reduce the burdens caused by them on businesses.

• Ofgem is committed to moving to a more principles-based approach to regulation, to reduce the size of the supply licence and reducing reliance on prescriptive rules. This puts far greater emphasis on energy companies to understand what is right for consumers and to deliver good outcomes

• DECC will work to produce a regular (e.g. annual) forward look – outlining the priorities and key changes in the energy sector over each coming year. They will strive to make the policy making process more predictable. This forward look of the focus of DECC and other industry bodies will help businesses to plan their engagement and allocate resourcing sensibly, as well as forecast the things likely to be coming up.