Vivid Economics, one of Britain’s energy and economic consultancies, has launched a report called ‘The Case for an Office of Energy.’
Supported by npower, the purpose of the report is to suggest how impartial and transparent data and reliable analysis could be provided covering all parts of Britain’s energy sector. This could be similar to the way that the Office for Budget Responsibility (OBR) provides data about Britain’s public finances. This Office of Energy could either sit within one of the current institutions or be set up as a completely new organisation that works alongside existing institutions.
The Office of Energy would ensure that there is clear analysis of the performance and impact of all actions in delivering affordable secure low carbon energy. It would also look at how changes to policy, regulation and the market affect the delivery of key policy goals.
An Office of Energy would not dictate or criticise legislation and regulation, in addition it would not seek to actively replace existing government bodies or institutions. In fact, it could be one of the existing bodies with updated responsibilities. Its aim would be to support government and the regulator by making, among other things, the consequences of legislative and regulatory actions clear, a similar role to the OBR.
Currently the energy sector features a complex relationship between consumers, markets, the state and third-parties. This results in competing policy priorities, most notably the ‘trilemma’ of affordability, security of supply and decarbonisation. For these priorities to be balanced in a way that delivers much needed trust for consumers and confidence for investors it is essential that discussions and decisions are grounded in accurate, reliable facts and analysis.
Current UK energy institutions have many good qualities but their current scope of responsibilities means they have not been able, in the view of many stakeholders, to consistently deliver balanced and clear analysis of key issues across the whole of Britain’s energy sector.
Successive governments have a track record of establishing institutions in other fields that excel in similar roles, such as the aforementioned Office for Budget Responsibility (OBR), the National Institute for Health Care and Excellence (NICE) and the Committee on Climate Change (CCC). This track record gives confidence that success could also be achieved in the energy sector, especially if the characteristics of these bodies are reflected in an updated or new institution.
Robin Smale, director at Vivid Economics, commented: “The UK energy market has been subject to criticism and controversy, due in part to a lack of analysis that is both trusted and clear.
“There is a case for a new role to enhance consumer and investor confidence by providing much needed trusted and clear analysis across the whole of the energy sector. Many stakeholders see value in this new role, and in identifying options for how this role could be delivered. With the CMA about to report, now is an opportune time to consider it.”
Paul Massara, CEO of RWE npower, said: “Earlier this year I asked Vivid Economics to look at whether there could be a new way to build the debate about energy on a complete foundation of fact and reliable analysis. From this foundation, we hope the energy dialogue can be reinvigorated so that we can all discuss the fundamental changes taking place within the energy industry in a way that builds consumer trust.
“An Office of Energy would support and empower a continuing open and transparent debate about the competing issues of the trilemma. It will provide greater certainty for consumers and ultimately de-risk investment decisions and new capital.”
