Out-Law News 1 min. read

Independent review into energy costs launched


The UK government has announced an independent review into the cost of energy, with the aim of ensuring the UK has the lowest energy prices in Europe.

Oxford University academic Dieter Helm will chair the review and will look specifically at how the energy industry, government and regulators can keep the cost of electricity as low as possible, while ensuring the UK meets its domestic and international climate targets.

The review will build on commitments made earlier this year in the government's Industrial Strategy, which said the UK should become a global leader in battery technology. Helm will look at the whole electricity supply chain from generation to supply, seeking opportunities to reduce costs in each element.

The review will consider technological change in the wider economy in the context of the energy sector, and the key factors affecting energy bills. In the terms of reference the government explicitly said carbon targets needed to be met, while concurrently ensuring security of supplies of energy, in the most cost-effective way.

Energy expert Jeremy Chang of Pinsent Masons, the law firm behind Out-Law.com, said many would welcome the inclusion of commitments to climate change targets.

"Many people were worried when this was first announced as part of the Industrial Strategy that this was a way to pull back from renewables by arguing that our decarbonisation policies were undermining competitiveness," Chang said. "However the terms of reference are very clear that Helm will be looking at the issue of energy costs in the context of meeting our decarbonisation targets."

Chang said Helm’s job represented a complex challenge which needs to take account not only of the development of smart technologies but also the impact of Brexit on the energy market, with issues such as freedom of movement and a weaker currency potentially affecting the sector.

Chang said the review would have more of an impact on the UK's long-term energy strategy than any immediate effect.

"We have some of the highest energy prices in Europe," said Chang. "Whatever the outcome is of this review, it won't be a short-term solution to deal with price rises, for example those recently announced by British Gas."

"If you're looking at creating a stable regulatory environment this is the right approach, but it doesn't help people on the ground today," Chang said.

Separately energy regulator Ofgem confirmed plans to tighten the price cap for pre-payment energy meters, cutting the average bill for dual fuel customers on such meters from £1,067 to £1,048. The announcement follows an earlier commitment from the regulator to examine options to protect vulnerable customers from continued price hikes. 

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.