Promoting competition and protecting customers? Regulation of the GB retail energy market 2008-2016

Abstract

In 1999 theGB retail energy marketwas open to competition for residential customers. In 2008 Ofgem began a series of regulatory interventions, notably a nondiscrimination condition and subsequently a restriction to four “simple tariffs”. This reversed its previous policy of minimal intervention. This paper explores the reasons for this change of policy, drawing upon the responses of economists and others to Ofgem and Competition and Market Authority (CMA) consultations. It argues that key factors were a significant increase in energy prices before 2008, the reduced involvement of economists in senior roles atOfgem, and systematic changes in Government policy and the statutory regulatory framework. Finally, the paper examines what the CMAEnergy Market Investigation had to say about this in 2016. The CMA found that these were inappropriate regulatory interventions, and laid part of the blame on arrangements for governance of the regulatory framework.