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22 January 2025 - Work of the Department for Energy Security and Net Zero - Oral evidence

Committee Energy Security and Net Zero Committee
Inquiry Work of the Department for Energy Security and Net Zero

Wednesday 22 January 2025

Start times: 2:30pm (private) 3:00pm (public)


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Ofgem questioned on the energy price cap, clean power by 2030 - and is Drax really sustainable?  

The rapid rise in energy prices when global economies opened up after the pandemic, exacerbated by Putin’s full-scale invasion of Ukraine in February 2022, exposed major weaknesses in the UK energy supplier market.  

Ofgem, the UK’s energy market regulator, had overseen the expansion of domestic energy suppliers from 12 in 2010 a peak of 70 companies in 2018; it introduced the energy price cap to protect consumers and encourage competition in 2019. By September 2021, the new entrants held around 40% of the market share.   

As wholesale gas and electricity prices rose to unprecedented levels, 29 of those energy suppliers failed, affecting nearly four million households in the UK between July 2021 and May 2022 and forcing costly taxpayer bailouts.   

Ofgem has subsequently come in for much criticism for creating the regulatory and market conditions that led to these widespread supplier collapses.  

Meeting details

At 3:00pm: Oral evidence
Inquiry Work of the Department for Energy Security and Net Zero
Chief Executive at Ofgem
Director General, Markets at Ofgem
Director General, Infrastructure at Ofgem
Director of Retail Pricing and Systems at Ofgem

In its first appearance before the Committee since the election, Ofgem will be questioned on its role in reaching the UK’s 2030 clean energy target: how it will work with the National Energy System Operator (NESO) to overhaul the national grid connections system that currently has an estimated 722 gigawatts equivalent energy supply queued.   

While this far exceeds the volumes needed for even the most ambitious net zero pathways – NESO estimates a clean power system will require an installed generation and storage capacity of around 210-220GW – at the current pace it would take years to bring that supply online.  

The biomass Drax power station has faced criticism for the source materials it uses and for the amount of CO2 it generates relative to the power it can supply. Is Drax really producing sustainable energy, and should it be getting billions of pounds in Government subsidies as part of the clean power plan?  

Ofgem will also face questions on the troubled national rollout of smart meters - long-delayed and off-track, 10% of the meters that have been installed do not work. 

And is the energy price cap still fit for purpose? Can it support the UK’s new clean energy market while fulfilling its original aim of protecting consumers from unfair pricing? 

Location

The Thatcher Room, Portcullis House

How to attend