Following our recent consultation, the publication of Ofgem's Forward Work Programme for 2021/22 marks an important milestone in our work to protect the interests of consumers today, to make sure they get a fair deal, and in the future, by tackling climate change.
The document sets out our activities that will deliver our new Strategic Framework over my five-year term as chief executive of Ofgem and beyond.
It comes at a critical time as we continue to work with government and industry to protect consumers as the country emerges from the COVID-19 crisis and to drive forward decarbonisation of the energy system ahead of November’s COP26 climate change summit in Glasgow.
I want to thank again all those working in the energy industry during the pandemic. I’ve witnessed a real spirit of collaboration and a focus on what really matters – protecting consumers, especially the vulnerable, and ensuring essential works are carried out to maintain energy supplies.
Our strategic focus
Our new strategic framework sets out five strategic change programmes that we believe Ofgem can deliver the greatest impact, in helping to shape the energy system and deliver real change in the interests of consumers and the climate:
- We will enable investment in the low carbon infrastructure needed to deliver net zero.
- To balance the system and keep costs down as the level of intermittent renewables rises, we will need full chain flexibility, for example, through flexible charging of electric vehicles.
- We will deliver a future retail market with innovative new retail products that, for example, enable consumers to benefit from the flexibility they can provide, while ensuring protections are in place for all.
- We will unlock the benefits of data and digitalisation to enable these changes at least cost.
- We will promote energy system governance arrangements that are fit for the future, including Ofgem’s role.
Thank you also to everyone who responded to the consultation. As well as those who attended the stakeholder event to launch the consultation in December, we received a wide range of responses from consumer groups, generators, suppliers, network companies and trade bodies.
Your input is invaluable to ensure that our work programme and resources are directed in the most effective way to protect consumers today and in the future.
There was broad support for the strategic change programmes above and no significant omissions were identified. Where material concerns were raised, we will consider how best to address them.
There were calls for example for us to be clear how the work set out in the Forward Work Programme aligns with the commitments we made in the Consumer Vulnerability Strategy 2025 and Decarbonisation Action Plan.
During the coming year, and as we further develop elements of our Strategic Framework, we will publish more details for the activities that we plan to deliver. To reflect this, the landing page for our Forward Work Programme on the Ofgem website will remain ‘live’ throughout the year. Updates will include our response to Government as it develops its goals for the energy sector in the Energy White Paper and to its intended Strategic and Policy Statement for Ofgem.
We are also intending to set out more clearly how the five strategic change programmes link together and the steps that are needed collectively in the coming years to deliver an effective and low-cost energy transition.
In addition to the strategic change programmes, there are many things that Ofgem needs to do today that we have always done. We will protect energy consumers from unfair pricing, ensure safeguards are in place for vulnerable consumers and drive the high standards and services expected of an essential service.
Across the wider energy system, we will work to maintain security of supply, to make sure that systems and codes are managed effectively, and deliver new regulatory approaches to manage cyber risks in our joint role as Competent Authority with the Department for Business, Energy & Industrial Strategy.
We will also continue to run government schemes that support decarbonisation and support some of the most vulnerable in society.
Of course, to realise this ambitious agenda, we recognise that Ofgem itself is going to need to change. We are working hard to transform ourselves to be an even more dynamic, inclusive and high-performing organisation as we face the regulatory challenges of tomorrow’s energy market.
Central to this is ensuring that Ofgem itself and the wider sector have diverse and inclusive workforces that better represent the consumers we all serve. We are holding a two-day event with the energy industry in April on the theme ‘from intention to action’ to commit to improving inclusion, equality and diversity across the sector as it will be fundamental to our shared success.
Finally, with COP26 ahead, Ofgem will bring together international regulators to reflect on what we need to do to support and drive forward net zero across the world. In May we will start this engagement programme by hosting an event to share best practice for energy regulation to help hit net zero.
The current crisis reminds us how important energy is as an essential service to consumers today, and its importance to our economic and environmental future as a society. Our goal is to build an affordable, low carbon energy system – and I look forward to working with you all to deliver this vision that I know we all share.