Skip to navigation Skip to content Skip to footer

Citizens Advice's response to BEIS's consultation on the ‘Review of Electricity Market Arrangements'

10 October 2022

Citizens Advice respond to consultation on Review of Electricity Market Arrangements (REMA) [ 300 kb]

We welcome the opportunity to reply to this consultation on the ‘Review of Electricity Market Arrangements’ (REMA) as the statutory consumer voice for energy in Great Britain. We look forward to engaging further on these topics as more detailed proposals are brought forward. We support the goals set out in REMA and view its successful design and implementation as vital in order to:

  • Deliver a decarbonised power system by 2035 at an effective cost
  • Put consumers at the heart of net zero by enabling all consumers, including those in vulnerable circumstances, to benefit from flexibility
  • Manage escalating constraint costs on the network

Successful reform must be delivered fast enough to be able to influence the investment decisions made this decade that will shape a decarbonised power system in 2035. However, the impacts of any reforms will be long-lasting, and will affect consumer outcomes and system operability for years to come. Without careful design and testing, consumers, especially those in vulnerable circumstances, may end up worse off.

We therefore support the approach taken by REMA in taking a comprehensive assessment of different options to address system challenges. We view it as too early to take definitive positions on specific reforms that BEIS is considering, and compelling evidence is required to exclude options at this stage.

However, consumer outcomes, and the system value their actions will provide, cannot be determined by viewing wholesale market reforms in isolation. We stress that reforms to the retail market and network planning must also be considered when assessing the distributional impacts of any changes. There are two main risks of not considering possible retail reform as part of the REMA process:

  • Locking in unfair outcomes: Without thinking through how costs are passed on in the retail market, it will not be possible to understand the distributional impacts of any wholesale reforms - this risks locking in unfair outcomes, and risks failing the objective of reforms being adaptable

  • Limiting the ability of BEIS to accurately assess the system value of wholesale market reforms: It will also make it impossible to properly assess different wholesale market reforms if this does not include a full assessment of how consumers may respond to wholesale reforms. This feedback loop from consumers will be crucial in determining the system value of reforms in a future electricity system where consumers are an active and engaged part of the power system

We welcome the inclusion of adaptability as a criteria for assessment of policy options, but emphasise that there are a number of additional regulatory considerations to ensure any option can successfully adapt to changing consumer needs and behaviours, as well as new technology types.

In light of this, we recommend  that the Department for Business, Energy and Industrial Strategy (BEIS) should:

  • Develop consumer engagements and protections as part of, rather than separate to, the REMA process

  • Conduct distributional analysis which considers possible retail market futures in combination with any proposed changes to wholesale market arrangements

  • Take a proactive and transparent approach to understanding consumer interests, through the set-up of a consumer forum, and the development of a framework for assessing what constitutes fair outcomes