Ofgem and Net Zero (2021)

The IET welcomes the opportunity to comment on the Ofgem and Net Zero – call for evidence from the House of Lords’ Industry and Regulators Committee.

The IET has submitted that Ofgem’s role is to provide and ensure energy-related environmental objectives are delivered as economically, and affordably, as possible. Ofgem should also look after vulnerable customers whilst ensuring suppliers meet their social obligations.

There are many recommendations within the report, but some of the IET points include:

• Ofgem should also have a specific duty to support low income and vulnerable customers in their transition to low carbon forms of energy, by mitigating the impact on their energy bills
• It will be important, especially in the context of RIIO-ET2 (currently effective until March 2026) and RIIO-ED2 (effective from April 2023 until March 2028) that transmission and distribution network companies (respectively) are appropriately incentivised to invest in ‘low carbon transition-ready’ networks.
• Ofgem must continue to carefully monitor the impact of its decisions on residual and forward-looking and network access charges and the extent to which they are supporting the energy transition by encouraging energy resources such as distributed renewable generation and energy storage, and new large power connections such as EV charging hubs, to locate where they are most needed from both an electricity system and customer perspective.
• Given the ‘critical infrastructure’ status of the electricity and wider energy system it will be essential that companies are incentivised (if not mandated) to invest in adequate cyber security measures.
• It will be important for regulated companies to develop robust recruitment, staff development, and succession planning initiatives, and for Ofgem to acknowledge that these are essential investments in our future capability to operate and manage an increasingly complex energy system in an efficient, coordinated and economic way.