Ofgem role must be re-written

LONDON (Reuters) - Regulator Ofgem should focus on fighting climate change after successfully marshalling British power and gas market competition over the last decade, according to government advisory body the Sustainable Development Commission.

Ofgem, which has focused on ensuring affordable and secure energy supplies since market opening in the 1990s, should pay more attention to cutting carbon emissions and nurturing renewable energy, the SDC says in a report on Wednesday.

"The potential for Ofgem to contribute to re-shaping the UK energy system for a sustainable future is huge," SDC energy commissioner Bernie Bulkin said.

"We'd like to see Ofgem's primary duty changed so that its central focus is on creating a sustainable system which costs as little as possible, rather than making a low cost system as sustainable as possible."

The report says the next decade will be a crucial time for making the changes needed to eliminate carbon from the UK's energy system by 2050.

The report recommends Ofgem introduce greenhouse gas reduction incentives for distributors, more smart metering to help customers cut energy consumption, help for low-carbon generators to compete against dirtier ones, and encourage more efficient communal heating systems.

Environmental groups say large amounts of energy are wasted and carbon dioxide unnecessarily emitted by conventional fossil fuel fired power stations and want to see more power plants pumping excess heat to nearby houses.

Graham Meeks, Director of the Combined Heat and Power Association, welcomed the proposal for Ofgem's role to be re-written by Whitehall.

"It is difficult to see how the Government can move forward with its energy policy agenda for the 21st century when the scope for action by its regulator is dictated by the priorities of the 1990s," Meeks said in a statement.