CMA holds the lines on remedies: CfD transparency; new industry change regime; new roles for Ofgem

The Competition and Markets Authority has promised ‘over 30′ changes in the energy industry to improve competition in what it described as “the most comprehensive investigation into the energy market since privatisation”.

The changes will be accomplished via a combination of CMA Orders and recommendations to Ofgem and government and the CMA promised a timetable that would see them implemented in the next six months.

The Authority’s measures saw no major changes from earlier draft recommendations.

Among the remedies:

  • National Grid shoud alter how it calculates losses to add a locational element.
  • Decc should undertake and publish new impact assessments on negotiated CfDs and consult on allocations for CfD auctions. Decc has opposed both proposals.
  • Customers who have not switched for three years will see their details passed to an Ofgem-held database so they can be targetted by other suppliers, including trial competitive options to be overseen by Ofgem.The CMA decided customers would have to opt out if they do not want to be included.
  • Ofgem will also be given more influence over the detailed codes that govern the working of the market. The CMA said they “currently give undue influence to established industry participants”.
  • Ofgem gets new powers to enable it to scrutinise the performance of the market and suppliers. It also will be asked to assess the impact of proposed policy changes – a proposal that Decc opposed.
  • Complete Project Nexus by 1 February 2017 or as soon as possible afterwards.
  • Move to half-hourly settlement in the energy market as soon as possible after a cost-benefit analysis

The Select Committee on Energy and Climate Change  will hold a one-off hearing to examine the Competition and Market Authority’s proposals on 5 July.

Further reading:

Decc opposes CMA remedies

Project Nexus delayed

The CMA, P272, and why consumers can’t take the full benefit of smart meters


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