Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Printer Friendly Version
Energy analysis: A call for evidence on the regulatory framework for gas and electricity retail has shown that most stakeholders want reform in the sector. Matthew Collinson, Legal and Regulatory Director of Energetics, analyses the responses to the call for evidence on future supply market arrangements.
First published in LexisLibrary. Click here for a free trial.
In brief, what is the background to this response?
The regulatory framework for gas and electricity retail is built (in part) on the 'supplier hub' principle. This means that gas and electricity suppliers - the entities that end customers contract with for their gas and electricity - are the only point at which end-customers interface with the energy system. Everything else is flowed back to other industry participants through Ofgem licences and industry codes. Industry codes are multilateral agreements that underpin the legal, commercial and operational interactions of industry participants.
Evidence gathered by Ofgem through its 'Innovation Link' suggests that this arrangement may be inhibiting innovation in the sector. The 'Innovation Link' is promoted as a 'one stop shop' offering support on energy regulation to businesses looking to introduce innovative or significantly different propositions to the energy sector.
Ofgem was also no doubt influenced by the conclusions of the Competition and Markets Authority's Energy Market Investigation to the effect that the volume and complexity of retail investigation is a barrier to entry and growth.
Ofgem therefore issued a call for evidence (on 14 November 2017) asking:
Ofgem published a response to this call for evidence on 31 July 2018.
What are Ofgem's key initial conclusions?
Most stakeholders agreed that the 'supplier hub' model needs to be reviewed, although Ofgem notes that the feedback it received was 'high-level and pointed to broad issues' rather than specific changes. The themes were that:
Ofgem agreed that the 'upplier hub'model does need to be reviewed, but that this will likely take place iteratively in a number of phases.
What are the next steps and timings thereof?
Ofgem plans to consult further over the remainder of summer, and autumn, in relation to more detailed next steps and timings.
What are the indications on direction of travel and how in practice would we expect changes to be implemented?
Ofgem intends to review the 'spplier hub'arrangements in iterative phases alongside other market-redesign initiatives, such as faster switching and the introduction of the Retail Energy Code. But beyond a desire to address the concerns raised by Ofgem (and reinforced by stakeholders), there is no clear indication of what reform might look like.
That said, from a practical perspective the parts of the regulatory framework that are in Ofgem' gift (in one way or another) are the supply (and other) licence conditions, and the industry codes that flow from them. This is where the 'supplier hub' principle is implemented in practice, and so any reform can be expected to take place through changes to those documents.
0330 161 1234