Graham Stuart, Minister of State, Department for Business, Energy and Industrial Strategy

5 December 2023

Review of Electricity Market Arrangements

Dear Minister,

We are writing to you as a diverse group of stakeholders who are engaging in the Review of Electricity
Market Arrangements (REMA).

REMA can support the government’s ambition of establishing a long-term solution to rising energy
bills by delivering a net zero power system at least cost and ensuring consumers benefit directly from
the UK’s home-grown energy resource.

The government must take this opportunity to address some fundamental challenges to the energy
system to ensure it can meet our ambitious net zero goals by:

• Driving investment in renewables and other low-carbon technology
• Efficiently building and operating a high renewables power system
• Making the most of renewables by empowering all consumers to participate in, and benefit
  from, flexibility.

Digitalisation and the use of artificial intelligence will be key to achieving our net zero goals and can
revolutionise system operation and the products and services available to consumers. Fair and
accurate market signals that better reflect the underlying costs of the power system – including where
and when power is produced and used – will help unleash innovation and drive down bills.

We urge the Government to ensure REMA remains focused on creating a digitally enabled market
that works for climate and consumers as the best way to permanently decouple electricity prices from
volatile international gas markets.

In the meantime, it is right to protect consumers from high electricity prices and we welcome the
introduction of a windfall tax on excess electricity generator profits. Structural solutions to this
challenge, such as splitting the market, should be avoided since they could take years to implement
and will deflect attention from the decarbonisation reform agenda. REMA must instead focus on
defining a journey that works for consumers and delivers the demand flexibility that the system will
need.

We would be happy to meet to discuss these issues.

Yours sincerely,

GUY NEWEY, CEO, Energy Systems Catapult
NICK MABEY, CEO, E3G
GILLIAN COOPER, Head of Energy Policy, Citizens Advice