The Economic Affairs Committee (the “EAC”), a select committee of the House of Lords, began an inquiry into the UK’s energy policy, titled ‘The Economics of UK Energy Policy’, on 21 July 2016. The EAC is concerned about a dysfunctional energy market and a possible conflict of government policies. While the risk of power outages or excessively high electricity prices remains relatively low, the EAC considers it important to explore how policy and subsidies may ensure the UK energy market continues to function effectively in the future.

The Call For Evidence

In order to ensure the UK energy market successfully functions to address the energy trilemma going forward, the EAC is now inviting written submissions in response to its inquiry. The EAC is particularly interested in key upcoming challenges or potential disruptions to the market, what public and private sector roles should look like, how to attract sufficient investment, and how to ensure appropriate pricing of energy.

Some of the questions it is seeking a view on include:

  • What are they key economic challenges to address over the next decade?
  • Which emerging technologies (for example, energy storage) could impact the energy market?
  • How could policy ensure a resilient energy supply?
  • Are there alternative methods of pricing energy to reduce the burden of high energy bills, particularly for less well-off consumers, or large industrial consumers?

The full list of questions can be found here.

Overall, the EAC is seeking to find out if there are failures in the energy market, and if so what measures could be taken to address them

Timelines

Written submissions are due on 30 September 2016. The EAC will hold public hearings between September to December 2016, and report to the House of Lords with recommendations in early 2017. This report will then receive a response from Government, which may be debated in the House of Lords.

Comment

This inquiry comes at an interesting time in the energy sector with the new Government and the subsequent merger of the Department for Energy and Climate Change into the Department for Department for Business, Energy, and Industrial Strategy (“DBEIS”). The EAC Call for evidence raises questions around the cost of energy and its impact on industry, both of which are addressed in DBEIS’remit. This shows a quick alignment of policy with industry.

It also follows shortly after the Competition and Markets Authority published its findings into the retail energy market. There is clear grounding for the inquiry given both the changes in subsidy regimes and the number of different policy developments in recent months, including those impacting balancing services, and what the EAC considers to have been an inconsistent approach to energy policy across different government departments.