Citizens Advice response to Ofgem’s consultation on frameworks for future systems and network regulation
Citizens Advice believes there is scope to improve the way that economic regulation is done. This would ensure that energy networks are regulated to manage investment on behalf of customers in a way that is lowest cost and in consumers’ interests. It is essential that net zero is delivered at the right and appropriate cost to consumers, not at any cost.
We agree with Ofgem on the case for change and welcome the areas that Ofgem has chosen to focus on which address issues we have previously identified.
As the statutory advocate for energy consumers we reflect on our experience in previous price controls and the resulting settlements determined by Ofgem.
The regulatory process is producing settlements which favour the network companies at the expense of energy consumers. We set out the various structural, resource and commercial asymmetries between the companies, Ofgem and stakeholders which we believe need to be addressed to deliver fairer outcomes.
In future, we welcome greater use of competition which we think could deliver the right consumer outcomes but at lowest cost.
We highlight the opportunities for achieving better value for money for consumers in both the cost of capital calculations and by setting incentives that better reflect a competitive market. We also challenge Ofgem to more clearly define the role of network companies.
While we support regulatory simplification, we highlight that any procedural cost savings will be significantly outweighed by a less robust process.