Future Energy Policy - Ofgem's Views

FUTURE ENERGY POLICY - OFGEM'S VIEWS · Important that the Government's future energy policy should consider not only the goals of energy policy, but also the means of securing those objectives. · Move to more broad-based measure, such as emissions trading scheme or carbon tax likely to be more effective in achieving climate change targets at least cost to customers · Competitive markets and effective regulation can deliver security of gas and electricity supplies · The regulatory framework for distribution networks needs to be revised to ensure fair and transparent access for distributed generation Measures to address security of supply concerns and future environmental objectives are among a number of issues discussed by Ofgem in its response to the Government's Energy Review Consultation published today (Wednesday 7 August). Some key points include: Climate change - The current UK approach to delivering reductions in greenhouse gas emissions includes a number of different measures each having additional objectives, such as promoting fuel diversity. It is not clear that the present range of specific measures represents the most efficient way of achieving Government goals and policy objectives. If significant ongoing reductions in greenhouse gas emissions are to be delivered in the future, consideration needs to be given to the most effective means to achieve this at least cost to consumers. A move to a more broad-based measure which aims to reflect the environmental cost of emissions and as such provide strong incentives to reduce emissions, such as an emissions trading scheme or carbon tax, is likely to be most effective in achieving this objective. It will be necessary to retain specific measures that target other policy objectives such as fuel poverty. Security of supply - the combination of competitive markets and effective regulation deliver security of gas and electricity supplies most effectively and efficiently. The DTI/Ofgem Joint Energy Security of Supply working group (JESS) plays an important role in monitoring security of supply issues, such as reviewing barriers that may prevent the market from operating effectively. Ofgem will take action, where appropriate and within its powers, to address these barriers. Future regulation of distribution networks - increased amounts of small- scale generation, including from renewable sources, will require increased connections to electricity distribution networks. Ofgem is committed to putting in place fair and transparent arrangements for generators to connect to the electricity distribution networks, and will continue to work with the DTI and the industry to analyse the network costs associated with future increases in distributed generation. Joanna Whittington, Ofgem Director of Strategy said "The Government's consultation provides the opportunity to identify and debate important issues that will shape future energy and environmental policy. Ofgem will continue to play an active role, working with Government and others, to ensure that the most effective and efficient measures are identified to meet objectives at least cost to consumers". ends Notes to editors: 1. On 14 May 2002 the Government published a consultation paper 'Energy Policy: Key Issues for Consultation. Responses to the consultation will help to shape the Government's Energy White Paper, due to be published later in the year. 2. The Government's consultation document was prompted by an energy policy review by the Performance and Innovation Unit of the Cabinet Office published on 14 February. 3. A carbon tax would be levied on fuels and other products or on processes in proportion to the greenhouse gas emissions to which they would give rise. 4. Emissions trading could involve requiring companies - or countries - to hold emissions permits in proportion to their greenhouse gas emissions, which would be freely tradable. 5. Distributed generation is electricity generation that is connected to the distribution network rather than the high voltage transmission network. It is typically smaller generation such as renewable generation, including small hydro, wind and solar power, and smaller Combined Heat and Power plant. 6. Ofgem's response to the Government's consultation on energy policy is available from Ofgem's website at:http://www.ofgem.gov.uk/public/pub2002.htm and in hard copy from the distribution centre by telephone: 0116 277 2617 or by email: distribution@ofgem.gov.uk from 23 May. Please quote the document number 50/02 when ordering. 7. Ofgem has today (7 August) published a consultation document seeking views on how to improve the framework of price controls on monopoly gas and electricity networks. The consultation paper "Developing network monopoly price controls - Initial consultation" is available from Ofgem's website. 8. Ofgem is the Office of the Gas and Electricity Markets, regulating the gas and electricity industries in Great Britain. Its aim is to bring choice and value to all gas and electricity customers by promoting competition and regulating monopolies. Ofgem operates under the direction and governance of the Gas and Electricity Markets Authority which sets all major decisions and policy priorities. Its powers are provided for under the Gas Act 1986, the Electricity Act 1989 as amended by the Utilities Act 2000. It also has powers under competition legislation including the Competition Act 1998 9. For further press information contact: Paul Reynolds on 020 7901 7225 Richard Hunt on 020 7901 7158 Mark Stockwell on 020 7901 7484 Out of hours contact: 0781 8457 969 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/08/07/20020807BIT00680/wkr0001.doc http://www.waymaker.net/bitonline/2002/08/07/20020807BIT00680/wkr0002.pdf