Source · Select Committees · Business and Trade Committee
Recommendation 16
16
Accepted
We recognise that this Committee has an important role in the scrutiny of Ofgem’s activity.
Conclusion
We recognise that this Committee has an important role in the scrutiny of Ofgem’s activity. We expect the regulator to be carrying out its core functions and delivering on its duties. It is neither feasible nor appropriate for Parliament to scrutinise, in real time, all aspects of Ofgem’s decision-making. However, in light of its extensive failures, we commit to undertaking closer scrutiny of Ofgem. We require Ofgem, to share key decisions, performance issues, and relevant policy concerns with this Committee. This should be in addition to writing to us with its Annual Report and Accounts and making both the Chairman and the Chief Executive Officer available for public scrutiny via this Committee. (Paragraph 67) Supplier Exit Arrangements
Government Response Summary
The government describes the 2021 consultation between Ofgem and BEIS on supplier payment default under the Renewables Obligation, and indicates that Ofgem published a consultation in June this year which included measures to protect money collected to meet Renewables Obligation payments.
Government Response
Accepted
HM Government
Accepted
Ofgem would support legislation for more frequent payment of Renewables Obligation payments. Ofgem and the Department for Business, Energy and Industrial Strategy published a joint consultation in 2021 on supplier payment default under the Renewables Obligation. The approaches included: Option 1: A legislative requirement for suppliers to settle their RO more frequently to lower the amount they can default on. Option 2: A licence-based requirement for suppliers to protect their accruing obligation against the risk of default. Option 3: Continuing with existing policy. The Department decided against intervention while considering the wide range of complex issues affecting the market. The Department also declared its intention to consider the potential to bring Fixed Price Certificates into force sooner than the previous commitment of 2027, along with moving policy costs away from electricity bills over the 2020s. Ofgem published a consultation in June this year which included measures to protect money collected to meet Renewables Obligation payments. Under Ofgem’s proposed solution, suppliers must protect their RO from 1 April 2023 on a quarterly basis either Responses to the Committee’s Third Report of Session 2022–23 25 through putting credit cover in place or discharging through ROC purchases. Ofgem is currently reviewing stakeholders’ responses to the policy consultation and considering next steps.