Ofgem welcomes Energy Act getting Royal Assent

Press release

Publication date

Industry sector

  • Generation and Wholesale Market
  • Distribution Network
  • Supply and Retail Market
  • Transmission Network

Ofgem has welcomed getting a statutory net zero duty after the groundbreaking Energy Act became law today.

The duty restates Ofgem’s principal objective to protect the interests of existing and future energy consumers.

But it adds a specific mandate to achieve it by supporting the Government meet its legal obligation to get to net zero by 2050.

It underlines consumers are best protected by building a low-carbon, low-cost energy system, limiting exposure to volatile gas markets and ending dependence on fossil fuels.

The Act overall gives Ofgem new powers to protect consumers and reach net zero – by unlocking investment, accelerating planning decisions, building new infrastructure and paving the way for innovation and technology.

The major new powers and responsibilities for Ofgem include:

  • Net zero duty: amending the regulator’s existing duties by including reference to the net zero targets and five-year carbon budgets in the Climate Change Act 2008. This requires Ofgem to consider how its decisions may assist the Secretary of State in meeting the government’s net zero target, while protecting the interests of existing and future consumers. Ofgem welcomed the Government decision in June 2023 to include the duty in the Act
  • New system operator: establish a Future System Operator and Independent System Operator – with responsibilities in both the electricity and gas systems, ensuring efficient energy planning, enhancing energy security, minimising cost to consumers and promoting innovation. The Bill imposes a duty on the Future System Operator to respond to requests for advice, analysis or information from government or Ofgem
  • Heat networks: appointing Ofgem as the new regulator for heat networks in Great Britain
  • Energy codes: new governance framework for energy codes – this will move responsibility from industry committees to “code managers” directly accountable to Ofgem. This will give Ofgem strategic powers to protect consumers and create competition
  • Hydrogen transport and storage: establishing new business models for hydrogen transport and storage to remove market barriers, like high upfront costs, and unlock investment with long-term revenue stability. 
  • Multi-purpose interconnectors: introduce a new legal definition for multi-purpose interconnectors into the Electricity Act 1989.
  • Energy intensive industry: give government powers to compensate energy intensive industries for a portion of their network charging costs – funded via a charge on all licenced electricity suppliers called the EII Support Levy
  • CO2 transport and storage: establishing an economic regulation model with statutory objectives and legal powers for Ofgem as the economic regulator of CO2 transport and storage. This will unlock private finance and remove investment barriers for novel technology

Jonathan Brearley, Ofgem CEO, said:

“We welcome the Energy Act getting Royal Assent. It is the most significant energy legislation for a decade and a world-first in giving us a legal mandate targeting net zero.

“It gives Ofgem the powers to drive through the energy transition - unlocking investment, accelerating planning and building the infrastructure the economy needs. This will give us security from volatile world gas markets and end our dependency on fossil fuels.

“Consumers have faced a huge number of challenges in recent years, with high energy prices and cost-of-living pressures. The Act will give extra protection for existing and future customers, while powering the journey to net zero at the lowest possible cost to households and businesses.

“We’re now working closely with government, consumers and sector to implement the legislation in full."