Ofgem’s ‘E-serve’ delivery body will be separated from the regulator and its future set out as part of a new ‘delivery landscape’ by the time of the Autumn Statement.
The Department of Energy and Climate Change (Decc) says in a review of the delivery landscape that spinning off E-serve – which coincides with a government review of independent regulators – is intended to ensure that regulator is “focused on the core function of economic regulation and promoting competition for the benefit of customers”.
At least 20 public and private organisations deliver around 30 energy schemes and policies, Decc said, including the Environment Agency, public sector loans company Salix, and the Low Carbon Contracts Company.
That complex landscape costs £40 million per year and leaves the Department uncertain “that programme delivery is coherent, efficient and provides overall value for money”. Decc said there were “overarching concerns regarding how well it serves the needs of consumers”. At the same time, Decc said it “does not have any delivery partner which ministers can direct without legislation to take on a programme delivery role.”
Now Decc wants to save money and make life easier for consumers – possibly via a single digital platform. It wants to reduce the number of delivery bodies, remove duplication (as contracts expire) and look for ways to merge back office functions. Detaching E-serve – which has the lion’s share of delivery – will be the first step. Other changes in the landscape will follow from a review commissioned by Decc and DCLG, due to report shortly, which is considering consumer advice, standards and enforcement for energy efficiency and renewable energy. The review is headed by Dr Peter Bonfield.
Decc said the E-serve spin-off had been “agreed with Ofgem” and it will require primary legislation. Decc currently has an energy bill before parliament but another, with provisions on smart meters, switching and network competition, is in draft.
Decc has also signalled changes in the role of System Operator National Grid, saying there was a “strong case for greater independence” to “ensure a competitive market with government out of the way, as much as possible by 2025”.