Energy policy organisations need condensing, says report
Released yesterday by leading think-tank Policy Exchange, the paper finds that over 30 quangos, departments funded but not run by the government, aid with the management of industry codes of practice and the operation of the energy system, whilst also stating that some of the bodies often carry out the same functions.
The National Grid receives the highest amount of money from the DECC, claiming £120m per year according to the report, with the Smart Meter Data Communications Company second highest with £103m.
The study argues that the department of Energy and Climate Change could save money and promote more competition and innovation within the energy sector by creating a single organisation for specific functions, as the current system acts as an obstacle for new energy companies looking to enter the market.
The paper suggests that the functions of at least 10 organisations currently involved in the delivery of renewable energy and energy efficiency policies should be rationalised into a single organisation, whilst also arguing that the 6 organisations involved in managing industry codes should be replaced with a single body as part of the government's Spending Review.
Lowering administrative costs, reducing administrative and regulatory complexity, improving responsiveness and flexibility and introducing clearer accountability are among the other recommendations made by the report, entitled ‘Governing Power: Improving the administration of the GB energy industry’.
Richard Howard, head of the Environment and Energy Unit at Policy Exchange and author of the report, believes that unnecessary complexity risks deterring new entrants and stifling company growth and innovation.
Writing in the paper, he said: “Discussions with energy companies as part of this research revealed that they simply do not have the resources to engage with all aspects of energy policy and regulation, such as the numerous industry working groups which develop industry ‘codes’, or market rules.
“In particular, smaller companies have to prioritise heavily, cherry-picking only the policies and regulations which affect them the most. This is partly due to the complexity of the policies and regulations, but is exacerbated by the complex institutional landscape.
“This risks giving large incumbent companies a competitive advantage, as only they have enough capacity to participate fully in the development of policies, regulations and market rules.”
