Urgent reform needed to safeguard UK energy supply
'Far reaching' energy reforms will be needed to safeguard Britain's energy needs, according to the industry watchdog.
Ofgem has demanded the Government today (3 February) recommends far reaching energy market improvements to unlock £200billion of new investment the industry needs.
In its report Project Discovery Ofgem states the 'unprecedented combination' of the global financial crisis, environmental targets, imported gas and the closure of ageing power stations has combined to 'cast reasonable doubt' over the future of secure and sustainable energy supplies
The report says to action is needed now not just to secure the supply, but also to keep prices 'affordable' beyond the middle of this decade.
The watchdog says 'tough action is needed now' to the reduce risk to energy supplies, help lower costs to consumers and help meet climate change targets.
Ofgem's chief executive, Alistair Buchanan, said: "We do not advocate change lightly, but all the facts point to the need for reforms now to provide resilient supply security.
"Ofgem has therefore put forward a range of possible options to unlock the up to £200 billion of investment Britain may need. We are keen to work with Government to find the best way forward."
Responding to the report, secretary of state for energy and climate change, Ed Miliband, said: "The Government is confident Britain will meet its security of supply needs in the years ahead.
"However, for the longer term, Britain will need a more interventionist energy policy.
"The scale and upfront nature of the low carbon investment needed is likely to require significant reform of our market arrangements to deliver security of supply in the most affordable way.
"That is why my Department began work last summer to plot out the pathways to a decarbonised, secure energy mix in 2050 and the options for reforming the market to deliver it.
"Ofgem's report will contribute to the proposals we will make at the time of the budget."
The CBI's deputy director general, John Cridland, said: "This report serves as a stark warning that existing policy will not deliver the balanced energy mix needed to provide security for the UK, help cut carbon emissions, and maintain competitive prices."
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