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Energy sector could save significant sums of money by opening up code administration to competition

With only half of code administration bodies in the energy market exposed to competitive pressures, do all organisations delivering these code related services strive for exceptional quality, while keeping costs low? Should they all be exposed to competitive tendering? These are some of the key questions that need addressing.

Energy sector could save significant sums of money by opening up code administration to competitionWith only half of code administration bodies in the energy market exposed to competitive pressures, do all organisations delivering these code related services strive for exceptional quality, while keeping costs low? Should they all be exposed to competitive tendering? These are some of the key questions that need addressing.

Industry codes are multilateral agreements that underpin market interoperability. They ensure fair and equitable competitive market practices (a level competitive playing field), and ultimately, support the delivery of services for customers. Codes are an intrinsic part of the governance infrastructure
to ensure energy markets work. This is an aspect also recognised by the Competition and Markets Authority (CMA), which highlighted within its provisional remedies that codes are critical for the functioning of the regulatory framework.

In its Cutting Red Tape of the Energy Sector publication, the Department for Business, Innovation and Skills (BIS) suggested four code administration bodies had a total operating budget of around £70 million in 2013/14. In addition, the CMA noted during its investigation into the retail energy market that the complexity of codes and the related governance arrangements created significant compliance costs for industry participants.

At a time when energy costs are under such scrutiny, the regulatory and governance framework should also be exposed to driving out inefficiencies and securing value for money for customers.

To read the full article please view the latest edition of the Utility Week Magazine. 

 

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