The chief executives of several big energy companies have jointly called on the UK government to shelve plans they say would undermine independent regulation and give ministers “extensive” new powers over the sector.
According to the signatories, which include Energy UK Chairman Lord Hutton, EDF CEO Simone Rossi, RWE UK Country Chair Tom Glover and SSE chief executive Alistair Phillips Davies, proposals in the Energy Prices Bill threaten to undermine the long-established principle of strong, independent regulation of the energy sector.
“We were alarmed to see clauses in the Bill that unexpectedly propose extensive new powers for Ministers in relation to the regulation of the sector,” a letter addressed to Secretary of State for Business, Energy and Industrial Strategy Jacob Rees-Mogg (pictured) stated.
“Given the change in leadership of the Conservative Party and a new Prime Minister, it is our view that the Bill must now be reconsidered and amended so that it is solely focused on ensuring that crucial support can be delivered for households, businesses and other non-domestic consumers this winter.”
It noted that while there is a vital role for the government to provide strategic direction for the regulator and to hold it to account for delivering on those expectations, their work needs to be done independently, expertly and objectively.
The letter added: “We are concerned that the proposals challenge the importance of an independent and stable regulatory, policy and governance framework. It is vital that the UK continues to have a regulator that can make decisions independent of Government while also working with the Secretary of State and civil servants to protect customers and create a healthy environment for investment.”
In addition, the joint statement noted that proposals concerning the Cost Plus Revenue Limit are significant enough in themselves to put investment in the UK’s low carbon industry in jeopardy at a time when it is most needed to ensure our long-term energy security.
Clauses in the Bill giving the Secretary of State powers to intervene to extend duration and intervene in the level of the Default Tariff Cap are equally concerning.
They stressed that this must be an independently made economic decision, based on the efficient costs accrued by energy suppliers.
Finally, the proposal to grant the Secretary of State powers to be able to widely modify licences and issue directions in times of an energy crisis has the potential to impact just about everything energy companies do on an indefinite basis.
“As it stands the Bill would offer no protection from any resulting financial implications for companies from following such directions, and little in the way of checks and balances typically seen in regulated markets,” the letter warns.