Policy Threads

28 Mar 2025 | Committee report linked

Three years ago, in April 2022, the previous government launched its Review of Electricity Market Arrangements (REMA) as part of its British Energy Security Strategy. This was the government’s flagship policy to enable a net 59 Q 68; Department for Energy Security and Net Zero, Quarterly Energy Prices UK April to June 2024, September 2024 60 Committee of Public Accounts, Decarbonising home heating, Thirty-Seventh Report of Session 2023–24, HC 653, May 2024, paragraph 10; Qq 21, 22, 65 61 Q 21...

Three years ago, in April 2022, the previous government launched its Review of Electricity Market Arrangements (REMA) as part of its British Energy Security Strategy. This was the government’s flagship policy to enable a net 59 Q 68; Department for …

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24 May 2024 | Committee report linked

We further recommend that Ofgem expedite its programme to deliver market-wide half-hourly settlement. We expect Ofgem to provide a progress report in response to this recommendation, setting out current barriers to delivery of this objective, identifying measures to overcome them, and indicating a target date for final delivery. (Paragraph 67) Enabling sustainable electrification of the economy 45 Developing an electricity grid ready for net zero

We further recommend that Ofgem expedite its programme to deliver market-wide half-hourly settlement. We expect Ofgem to provide a progress report in response to this recommendation, setting out current barriers to delivery of this objective, identifying measures to overcome them, …

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24 May 2024 | Committee report linked

We recommend that Ofgem work with the NESO, the Department for Energy Security and Net Zero and the Energy Networks Association to ensure that developers can call on the fullest possible range of providers when seeking to connect their generation facilities to the grid.

We recommend that Ofgem work with the NESO, the Department for Energy Security and Net Zero and the Energy Networks Association to ensure that developers can call on the fullest possible range of providers when seeking to connect their generation …

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16 Jun 2023 | Committee report linked

We are very concerned about the Department’s lack of urgency in addressing the energy market failures that are leading to high energy bills for consumers. During 2022–23, the UK experienced record-high wholesale gas prices. Since 2019, Ofgem has set a price cap that energy suppliers can charge households. The level of the cap increased by 80% in winter 2022–23 to £3,549 compared to summer 2022– 23, mainly because of increasing wholesale prices. This is because the UK electricity market operat...

We are very concerned about the Department’s lack of urgency in addressing the energy market failures that are leading to high energy bills for consumers. During 2022–23, the UK experienced record-high wholesale gas prices. Since 2019, Ofgem has set a …

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16 Jun 2023 | Committee report linked

The approach to pricing electricity in the UK – known as marginal pricing - means that high wholesale gas prices results in high energy bills for consumers. This is because all electricity generators in the market are paid a fixed price per unit of electricity, which is determined by the most expensive bid needed to meet demand, which currently is often provided by gas plants. Therefore, wholesale electricity prices will be exposed to gas prices even as the proportion of gas generation decrea...

The approach to pricing electricity in the UK – known as marginal pricing - means that high wholesale gas prices results in high energy bills for consumers. This is because all electricity generators in the market are paid a fixed …

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16 Jun 2023 | Committee report linked

We asked witnesses about the effectiveness of the marginal pricing system and whether what customers were being charged reflected the cost of producing the energy they used. The Department told us that it was looking into this issue through its Review of Electricity Market Arrangements (REMA).68 The REMA is a major electricity market reform the Department announced in July 2022, to support full decarbonisation of the electricity system by 2035 ensuring security of supply and cost effectivenes...

We asked witnesses about the effectiveness of the marginal pricing system and whether what customers were being charged reflected the cost of producing the energy they used. The Department told us that it was looking into this issue through its …

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16 Jun 2023 | Committee report linked

We asked about whether the vast majority of the additional cost of energy to UK customers was going into increased profits for the energy sector. Energy UK told us that in looking at decoupling electricity and gas, the government should look at ensuring cheaper prices in the long term. Energy UK told us renewable energy companies that have been built under contracts for difference have been paying back in the last 18 months and as a result consumers have seen discounts on bills. It also highl...

We asked about whether the vast majority of the additional cost of energy to UK customers was going into increased profits for the energy sector. Energy UK told us that in looking at decoupling electricity and gas, the government should …

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28 Apr 2023 | Committee report linked

We agree that the wholesale electricity market arrangements need reform to help decarbonise power in a way that secures supply and ensures the system can function efficiently, including more locational signals. In principle, we find the argument for locational pricing appealing, but we are concerned about its deliverability and its potential impact on investor confidence. The Government must satisfy itself that any reforms it does pursue do not create an investment hiatus, which would put the...

We agree that the wholesale electricity market arrangements need reform to help decarbonise power in a way that secures supply and ensures the system can function efficiently, including more locational signals. In principle, we find the argument for locational pricing …

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28 Apr 2023 | Committee report linked

We recommend that the Government provides before the end of 2023 a clear pathway on how wholesale market arrangements will evolve following its consultation. There are a number of constructive steps that the Government could make to the existing market structure in the near term, which would help it to provide more effective signals on the type of low-carbon technologies and services the UK needs to decarbonise power. The optimal degree of locational granularity should weigh the benefits agai...

We recommend that the Government provides before the end of 2023 a clear pathway on how wholesale market arrangements will evolve following its consultation. There are a number of constructive steps that the Government could make to the existing market …

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26 Jul 2022 | Committee report linked

We recommend that, given the size of Bulb, the costs of the Special Administration Regime are paid through general taxation, as opposed to recouping the costs from already stretched energy bills. The Government should undertake a review of the Special Administration Regime to consider how to reduce the cost exposure to the taxpayer in future, and report to this Committee within the next six months on the lessons learned and any required reforms. We suggest, as a minimum, that the Treasury gui...

We recommend that, given the size of Bulb, the costs of the Special Administration Regime are paid through general taxation, as opposed to recouping the costs from already stretched energy bills. The Government should undertake a review of the Special …

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