Utility Week

6 | MARCH 2021 | UTILITY WEEK "The lead up to COP26 is a huge opportunity to galvanise broader enthusiasm and ambition towards tackling climate change across the UK and find consensus on how the sector can collectively speed up the transformation needed for a net zero future." John Pettigrew, launching Utility Week's new Countdown to COP campaign (see p10-15). The Month in Review Penrose regulation report lacks detail A long-awaited report outlining recommendations designed to strengthen the UK's com- petition regime has been cautiously welcomed by industry observers but described as lacking in detail. The Power to the People report by Conservative MP John Penrose has a heavy focus on streamlining regula- tory processes and creating further competition where possible. Speaking to Utility Week, Simon Oates, consultancy firm Fingleton's head of infrastructure practice, described the report as a "good provo- cation for further debate" but said it had less concrete detail on changes than he expected. "The direction of travel being around streamlining regulatory pro- cesses and increasing the emphasis on creating competition wherever it can be created in regulated sectors is really positive," he said. Among the report's key recommen- dations are changes to simplify the appeals process for regulatory deci- sions. Currently the appeals process is inconsistent across sectoral regulators and the Competition and Markets Authority (CMA) has previously proposed that any appeals it currently considers should instead be dealt with by the Competition Appeals Tribunal (CAT) and that it should be done at a judicial review standard. Penrose called this a "pragmatic step" and said it should "go ahead promptly" but made no reference to what standards appeals should be held to. Former Ofgem chief executive Dermot Nolan, now also at Fingleton, agreed that inconsistency needed to be addressed, going so far as calling the current system a "mess", but he described the proposal as a "slightly ambiguous recommendation". "What he has not said – and is totally silent on – is the question of whether or not such an appeal should be a full merits appeal or indeed just a pure judicial review standard," Nolan said. Further recommendations in the report include sector regulators gradu- ally handing over their consumer- facing powers over time. To do this, regulators should set out a multi-year plan to turn as much of their sec- tor into a "normal" pro-consumer, high-standards competitive market as possible, leaving a monopoly network leŽ to regulate. (See comment on p17) Adam John, reporter 'Golden opportunity' to reform system rules The review of system opera- tion announced by the gov- ernment in its recent Energy White Paper as well as its ongoing review of code gov- ernance, together provide a "golden opportunity to reform these arrangements holistically", Elexon has a stated in a new paper. The administrator of the Balancing and Settlement Code said reforming gas and electricity system operation and code governance in tan- dem would allow "once in a generation" changes to be made. In the white paper pub- lished in December, the Department for Business, Energy and Industrial Strat- egy (BEIS) said it would "ensure the institutional arrangements governing the energy system are fit for purpose for the long term, consulting in 2021 over organ- isational functions, including system operation and energy code governance". BEIS said this work would include a review of the roles and structure of the Electric- ity System Operator follow- ing its legal separation from National Grid Electricity Transmission in April 2019. AŽer conducting its own review of energy system operation, Ofgem revealed proposals to fully separate the ESO from National Grid to create an impartial body with an expanded remit. It said this Independent System Operator could also incorpo- rate some or all of the func- tions of the system operator for gas (see analysis p20-23). Elexon itself has outlined three options for the reform of energy system operation and code governance. Read in full at: www.utilityweek.co.uk The report is a "good provocation for further debate" SIMON OATES, HEAD OF INFRASTRUCTURE PRACTICE, FINGLETON

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