Energy UK has called for regulator Ofgem to shed some of its responsibilities, and “create a streamlined and more focused organisation better equipped to carry out its main duties”.
The Department for Energy Security and Net Zero is currently undertaking a review of Ofgem’s role.
Energy UK argues in a paper published today (22 October) that Ofgem has become “too big and bureaucratic”.
The office’s headcount has increased by 120% and its budget has doubled, far outstripping the industry’s workforce growth of 8%, Energy UK said.
Energy UK’s chief executive, Dhara Vyas (pictured) said: “Systemic regulatory failures have left customers on the hook for billions of extra costs and a massive increase in red tape is holding back investment at precisely the time we need it most.
“It’s vital that a sector as important as energy has an effective regulator both for those companies it oversees and the customers they serve.”
Vyas added that the current review is an “ideal opportunity to reset energy regulation with a new structure that enables effective oversight of a fast moving and rapidly developing sector, which will continue to play a central role in this country’s future.”
Ofgem responded that it was keen to work with industry to “cut red tape and back investment”, but that firm regulation remained vital to protect consumers and maintain confidence in the sector.
A spokesperson added: “We will continue to work closely with the industry, Energy UK, and consumer groups as the energy system evolves, and the Ofgem review is an important opportunity to ensure regulation and our remit keeps pace with change.
“No matter how you arrange the institutions – a strong, independent energy regulator will always be essential. In recent times the energy market has under-served consumers with the regulator needing to step in: satisfaction has only recently improved to record highs, from a low of 66% in 2022 and suppliers now hold around £7.5 billion in assets compared to heavy debts during the crisis.
“And we stand ready to unlock £80bn of investment in the system with clear oversight, moving quickly as needed.”