Five things we learnt from Energy Spectrum | Issue 652

We present five key themes and findings from this week’s edition of Energy Spectrum issue 652

Ofgem’s supplier licensing consultation, focused on tightening licensing requirements and the setting of minimum standards of operational and financial conduct for energy suppliers and their directors, is long overdue. In this week’s Energy Perspective, we suggest that the consultation, which is built around four precautionary principles, is well-pitched – not least because too many entities have entered the market not fully understanding the risks they face or with insufficient resources to manage them. Using our recently published response to the consultation as a basis, we explain that the regulator must ensure that its monitoring is based on appropriate and quantifiable values of suppliers’ financial and operational performance and offer several suggestions on how this can be delivered.

The UK’s draft National Energy and Climate Plan, published on 29 January, offers a comprehensive overview of energy-related policy spheres to date but also poses several questions regarding the new policies needed to fill the gap for the fourth and fifth carbon budgets. In this week’s Policy section, we consider the detail of the draft document, which must be presented in its final version to the EU by the end of 2019.

Ofgem’s consultation on a proposed budget for the Retail Energy Code Company (RECCo) was issued on 25 January. In our Regulation section, we find that given the cross-cutting code review currently being undertaken by the regulator, it will be interesting to understand further how this newest code body will play into the mix.

While the ambitious Balancing Services Charges Task Force, which held its first meeting on 29 January, will likely result in significant further changes to the charging regime in the not too distant future, it is important that its analysis and accompanying assessment work is not rushed. This is our conclusion of the taskforce’s initial discussions, highlighted in this week’s Industry Structure. The section also looks more closely at the factors influencing record high gas for power demand on 23 January.

In Nutwood, Cornwall Insight Associate Maxine Frerk discusses why Ofgem and other regulators are re-examining the approach taken to network charging as part of the wider energy transition. Frerk suggests that, as a result of potential impacts on customers and investors, regulators must view their approach to the subject of network charging as far more than merely an exercise in technocratic cost allocation.

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