OSLO (Reuters) -Britain’s energy regulator Ofgem on Wednesday announced a review into how costs are allocated across the energy system, including alternative pricing models for consumers, to better adapt to more renewable energy supply.
Britain has a target to largely decarbonise its power sector by 2030 which will mean reducing its reliance on gas-fired power plants and rapidly increasing its renewable power capacity.
Less reliance on the price of gas is expected to bring down the variable costs of the energy system, Ofgem said.
“However, fixed costs, such as those needed to upgrade the energy network to deliver cleaner and more secure power to our homes – could rise,” Ofgem chied executive Jonathan Brearley said in a statement.
Under the current regimes, system costs are paid for by energy system users and consumers through their energy bills, with separate stand-alone bills for electricity and gas.
Given the expected system changes and increasing proportion of energy costs on household bills than previously, now was the right time to look at potential alternative models in how bill-payers are charged, Ofgem said.
This included ensuring that increased fixed costs do not disproportionately affect vulnerable and low-income consumers, it added.
The regulator stressed that it is only seeking views at this point and is not recommending any specific option.
(Reporting by Nora Buli in Oslo; editing by Nina Chestney)
