Ofgem says it will speed up rulemaking as UK energy system faces rapid change


stopwatchEnergy regulator Ofgem has suggested it will move away from slow, often prescriptive rulemaking towards swifter, outcome-based regulation in a bid to keep pace with the UK’s rapidly changing energy system.

The regulator has issued a direction of travel paper in which it admits ponderous regulatory projects are no longer fit for purpose.

“Given the pace of change and uncertainty, we can no longer rely on three to four year projects to develop regulation that will set policy for the next decade but rather need to set clear principles and a direction of travel for regulation,” Ofgem stated.

However, the regulator said it may not entirely move away from its current approach.

“This does not mean we cannot conduct broad reviews of market arrangements but we need to acknowledge these are more difficult in an uncertain world,” it stated.

The regulator pointed out that government projections, as well as those of system operators, have often proven wide of the mark in hindsight. For example, solar PV deployment has far exceeded any predictions while energy demand variances have been much wider than most forecasts made in previous years.

Such projections, said Ofgem, cannot be relied upon for policy or rule making. Hence the regulator’s acceptance that it needs to be much more agile in order to keep up with actual system changes as they occur.

Ofgem now seeks further stakeholder engagement in its ‘Future Insights’ programme.

See the document here.

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