Ofgem has a duty to undertake impact assessments (IAs) for all important policy proposals that we make. We have developed a rigorous approach to IAs in line with best practice, while ensuring that our decisions are consistent with our wider statutory duties.
We have recently carried out a review of our approach to conducting IAs and have published revised guidance. Amongst other things, the guidance sets out the legislative background for producing IAs and outlines the basic framework that Ofgem will normally follow in producing them. The guidance has been revised to take account of best practice as it has developed, for instance in relation to sustainability issues, and it sets out Ofgem's approach to cost-benefit analysis.
Whilst impact assessments are not determinative of the final policy decision that we make, they are a vital part of the policy-making process and provide a valuable framework for assessing the impact of important policy proposals.
The new guidance applies to Ofgem’s IAs published from 1 May 2008.