Regulatory changes in the energy sector as suggested by the Competition and Markets Authority (CMA) yesterday have been welcomed by both the Big Six companies and newer entrants.
The CMA announced last July that it would be examining the energy market after a referral by Ofgem. The group said in an update to the market yesterday that “a clear cross-cutting theme” around the fact that the regulatory framework had been so fundamental in shaping competition in the market had emerged in its investigation to date.
The CMA plans to further investigate two issues in particlar – first, whether the number of codes in electricity adds to barriers to entry or expansion, and whether the current system acts as a barrier to innovation and change.
Ovo Energy’s corporate affairs chief Jessica Lennard told City A.M. that the company had been “very frank” in its conversations with the CMA during the investigation, particularly in suggesting “regulation is overburdensome and stifles innovation”.
According to Lennard, firms are “drowning in code”, and, for smaller firms in particular, there is a “presumption that regulation is anti-innovation”.
However, she added: “I’ve got to be fair to Ofgem, they are becoming better at letting us work around the rules.”
She also praised the CMA for making a “punchy statement”.
She said: “It’s still early days but I think anybody who is trying to put it about that the CMA was just a political exercise will have had a nasty shock to the system today. They clearly mean business.”