Major review launched into energy cost allocation

Ofgem has launched a major review into how costs are allocated across the energy system.

The regulator said the Cost Allocation and Recovery Review (CAR) will look at the whole energy system, from energy generation through to consumption, and explore the trade-offs involved in different models.

Ofgem said the review comes at a time when the energy system is changing, with maintenance investment and upgrades required and growth in renewables.

It said both non-domestic and domestic customers are also changing the way in which they use energy, including by using new technologies to shift their use to different times of the day and in some cases by increasing their use of electricity.

Ofgem CEO Jonathan Brearley said: “The launch of this review is the next step in developing fairer pricing for a changing energy system, ensuring more choice for consumers while protecting those most in need.” 

The regulator stressed it is only seeking views at this point and is not recommending any specific option.