Comments on the CMA Energy Market Investigation – Updated Issues Statement
Catherine Mitchell, Bridget Woodman, Caroline Kuzemko and Richard Hoggett, Energy Policy Group (EPG), University of Exeter
Summary
1. We, the EPG, are very pleased that the CMA investigation is taking place because it is has encouraged a much wider debate about the future of the GB energy system. Whilst, in fact, the EPG does not agree with most of what the CMA appears to have concluded so far, the process has been very beneficial, particularly with the uploading of the various working papers.
2. We are particularly pleased that the CMA has widened its investigation to 5 Theories of Harm (ToH), with the new and fifth ToH focusing on the broader regulatory framework.
3. We recognise that the CMA has to work to a particular remit set out in its Terms of Reference (ToR). So far, in our view, the CMA’s interpretation of their ToR is through a too narrow economic lens which will not allow them to fully explore the underlying issues of competition at work in the current GB energy system. We hope that the combination of a 5th ToH and a broader interpretation of the ToR will enable this to happen in the next stage of their investigation.
4. The EPG argued in our original submission that the energy system is an interconnected, whole system and that it is important that the CMA considers the impact of four or five issues together rather than each issue individually, as their ToR seems to allow. By focusing, so far, on the latter, they miss the greater and more important impact on competition of the sum of the issues.
5. Overall, the document is still too focused on short term price issues. We appreciate that the CMA is constrained by its remit, but it needs to look at price and affordability issues in the context of delivering the Governments climate change and security goals in the long term. Not doing so risks trying to provide short term fixes to a problem which is inherently long term.
Full Comments
Our full comments are available on the CMA Website or can be download via this link CMA Submission from Exeter EPG 14-04-15.
Further Information
In addition to this submission, we have also attended a hearing with the CMA, and blogged about the investigation here and here.
Posted by: rhoggett
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