Citizens Advice response to Ofgem’s call for input on the energy networks ring fence review

Citizens Advice response to Ofgem’s call for input on the energy networks ring fence review. 237 KB

We welcome the opportunity to respond to Ofgem’s call for input on the energy networks ring fence review. 

Citizens Advice agrees that it is timely that Ofgem should be reviewing the ring fence arrangements for network companies, including both incumbent network companies and independent networks.

The failures we saw in the energy retail sector, including from insufficiently capitalised companies, ultimately imposed costs of £billions on consumers.

We are aware that the ownership structures of network companies are becoming increasingly complex which can introduce risks for consumers without suitable protections. Challenges in the water sector also highlight the importance of Ofgem taking all reasonable actions to mitigate any similar risks in the energy networks sector.

Citizens Advice is concerned that Ofgem’s initial work has already identified a range of weaknesses and strongly supports: 

• Ofgem undertaking this review

• Ofgem ensuring ring fence arrangements are sufficiently strong as to minimise risks to consumers

• Ofgem not restricting the approach it takes to securing these outcomes for consumers.

Overall, we believe the outcomes of a robust set of ring fence arrangements should be positive for both network companies, who will be viewed as an even safer investment, and for consumers due the potential lower borrowing costs this could enable.