Citizens Advice response to the Ofgem Open Letter on Future Network Regulation

Citizens Advice response to the Ofgem Open Letter on Future Network Regulation [ 140 kb]

We welcome this opportunity to respond to this Open Letter on Future Network Regulation. The energy infrastructure of the nation is a critical part of the transition to net zero and has a special significance as it underpins the ability for everyone to conduct their daily lives. Every pipe, wire, and transformer is paid for by the nation’s consumers. It is therefore necessary that the framework for delivering the energy infrastructure that we need for now and for the future is effective and cost-efficient. It is vital that the regulatory framework is fit for the future and can respond to the changes that are underway, and those that will continue to evolve as new technologies or processes emerge.

In anticipation of a review of network regulation, we commissioned research into alternative regulatory frameworks. This research revealed a range of opinions and solutions, and we have used this information, and our own experiences of the current regulatory framework, to inform this consultation response. While the ‘RIIO’ framework was largely viewed positively, there were many suggestions for improvements. We have outlined below our 8 key recommendations for the government and Ofgem to ensure that the regulatory framework is fit for the future.

We recommend that Ofgem reads our short report on ‘Future Network Regulation: Delivering a regulatory framework fit for the future [ 1.1 mb]’ as this provides an overview to our thinking and recommendations. The full report from Delta-EE [ 0.69 mb] gives the varying views, solutions, and rationales that were explored in reaching our conclusions.

Our 8 recommendations are:

1. Government should give more clarity on priorities to Ofgem via its intended revised Strategy and Policy Statement (SPS)

2. Government needs to provide an overarching strategy for supporting customers, especially those in vulnerable circumstances

3. Ofgem needs to ensure that the regulatory framework works more effectively

4. Consumer and stakeholder views have to be better incorporated within the process

5. Flexibility has to be built into the regulatory framework to cope with a rapidly changing environment

6. Inefficient, time-consuming, and costly processes need to be reformed

7. Improved and rigorous performance reporting needs to be built into the regulatory framework

8. The information and resource asymmetry between network companies and other stakeholders, including the regulator, needs to be addressed