Submission to the BEIS / Ofgem Consultation on Reforming the Energy Industry Codes
Submission from the Energy Policy Group, University of Exeter
Catherine Mitchell, Rebecca Willis and Richard Hoggett
Section 1: Introduction
We find the consultation document to be a thorough and honest review of the long standing discussions about the need to reform Codes.
However, before commenting on the specifics of this consultation, it is important to state that the effectiveness of specific measures like Industry Codes reform is dependent on overall system reform. Our research has shown that current GB governance arrangements are not capable of delivering energy system goals. IGov has proposed a series of reforms to deliver an efficient, whole-system energy governance framework, set out in this briefing.
We would have liked to have been able to say unequivocally we support the Model 1 or the Model 2 (Integrated Rule Making Body), as proposed in the Consultation. However, we think there are bigger, whole system issues at play here – as the Consultation itself raises in its Question 14.
EPG’s choice depends on bigger, whole system decisions about regulatory (and institutional) reform raised in the Flexible and Responsive Energy Retail Markets consultation document. This latter Consultation raises the issue of a new, overarching regulatory framework – what it calls a Modular approach to regulation (page 25), as opposed to taking an incremental regulatory change approach (page 20, which we think can only end in failure). We support the Modular approach to reforming the GB regulatory system.
Our decision to support Model 1 or Model 2 in this Codes Reform Consultation depends on other decisions, as yet untaken, related to a modular approach to regulatory reform.
We are clear though, and this will come out in our answers to the Consultation questions in Section 4 below, that we do not support a Model 1 Strategic Body that is related to Codes only. Moreover, we would not support a Strategic Body related to Codes only to be overseen, or be part of Ofgem. We think this would be a backward step.
If modular reforms of the regulatory system are not undertaken, then we would support an IRMB (Model 2) as a preferred next step, albeit as a second best, incremental outcome.
We would then argue that modular regulatory reform should be further discussed. If modular regulatory reform were then implemented, the IRMB Model 2 could then fit into that reasonably easily.
This EPG response is set out in the following way: Section 2 gives our upfront arguments for our decisions. Section 3 gives an overview of the development of the IGov arguments with respect to Codes over time. Section 4 gives replies to the Consultation questions. Section 5 concludes.
You can read the full submission here: EPG submission to BEIS-Ofgem Reforming the Energy Industry Codes 16-09-19