Innovation and energy industry codes in Great Britain
Matthew Lockwood, Catherine Mitchell, Richard Hoggett and Caroline Kuzemko
EPG Working Paper: 1508
This paper examines the role of industry codes in the governance of the energy system in Great Britain, focusing especially on how codes and code governance affect attempts to transform the system to a more sustainable future. We lay out the nature of codes and why they are important for achieving policy change. We then describe the way in which codes are governed, including reforms in the late 2000s and two more recent reviews. Three challenges for the codes system are then discussed in detail: complexity and fragmentation, and how these act as a barrier to new entrants; the gap between code objectives and high level policy aims; and the self-governance approach in a period of rapid transformation. These challenges point to the need for reform. We argue that the two official review processes currently underway are too narrow in nature and a more thorough-going approach is needed. An alternative agenda is then developed. We propose that code modification be undertaken by a dedicated code management body. This would not be located in the regulator (Ofgem) but in an independent system operator. We also suggest various ways of mitigating risk in such an arrangement. The ultimate aim is to make the process of writing industry codes to support policy innovation simple, technical and transparent.
Keywords: governance, regulation, Ofgem, CMA, codes, innovation
Date: December 2015
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