Ofgem’s duty to contribute to the achievement of sustainable development was introduced in 2004. In 2008, the Energy Act promoted this duty, placing it on an equal footing with our duties to meet reasonable demand and financing authorised activities. The Act also highlighted that our principle objective, to protect the interests of consumers, refers to future as well as existing consumers. These changes underline Ofgem’s important and developing role in shaping the future of gas and electricity industries in a sustainable manner.
We are facing a future that involves increased geopolitical risks to energy security, potentially higher energy prices and the need to do much more to reduce greenhouse gas emissions while making sure everyone can afford to adequately heat their homes.
While much of what is needed to deliver sustainability is not within our direct control, we see it as our responsibility to facilitate change by engaging in the debate, trying to persuade relevant players to make changes where required and contributing information and expertise where we can. For example, we have been at the forefront of assessing the case for advanced metering for domestic energy consumers and we have made proposals in response to the Energy Review on how the EU Emissions Trading Scheme could be improved.
Ofgem’s sustainable development work focuses on five themes:
Managing the transition to a low carbon economy
Our decisions on the industry rules for competitive markets and the regulation of monopoly networks facilitate the development of lower carbon technologies.
Eradicating fuel poverty and protecting vulnerable customers
While the causes of fuel poverty go beyond energy markets, we are committed to working with Government. Competitive markets can deliver lower prices and more innovative products than regulated markets but some regulation remains necessary to protect vulnerable energy customers.
Promoting energy saving
We recognise the huge range of benefits - environmental, social and economic - that energy saving can bring and are committed to playing our part to encourage all energy consumers to be more energy efficient.
Ensuring a secure and reliable gas and electricity supply
Our regulation of the electricity and gas networks, and our commitment to sustaining a regulatory environment conducive to investment, underpin our work to ensure that cost-effective, reliable energy supplies are always available to consumers.
Supporting improvement in all aspects of the environment
Beyond the climate change agenda, the gas and electricity industries affect the environment through other emissions and their impacts on our countryside and communities. We are committed to working with all stakeholders to ensure that we take these wider considerations into account in all of our decisions.
Ofgem published its first annual Sustainable Development Report in 2006, reflecting our commitment to our sustainable development duty.