The Department for Business, Energy and Industrial Strategy (BEIS) recently invited views on how future government policy can best achieve the vision set out in its Energy retail market strategy for the 2020s, and how lessons from recent market developments should inform this as part of a wider refresh of the strategy.

We welcome this initiative to refresh the energy retail market strategy. This is necessary as measures are needed to address the current retail market crisis but it is also necessary as the longer term reforms presented in July 2021 need to be both:

• more ambitious and integrated with wholesale market reforms, and
• delivered at a faster pace with work to design and implement reforms starting without delay.

Many relatively new entrants have recently exited the retail market and this can be seen as detrimental for innovation and competition. A careful balancing act is required to ensure reforms protect consumers on the one hand but enable innovation on the other.

Key points

In the short term, we support action to protect consumers through improvements to the methodology underpinning the price cap, more regular update of the price cap and interventions to improve the credit-worthiness of the industry.

At the same time, the Government should initiate an ambitious programme of energy market reforms to put in place a market and regulatory framework capable of delivering net zero. We expect that this is likely to entail:

• substantial revisions to the supplier hub concept so that regulation of the actors in the market is appropriate to the activities they undertake in the context of a reformed policy framework and market design.
• putting in place a policy framework that is outcome-focused (particularly around the twin objectives of service reliability and achievement of net zero)
• moves quickly to incentivise retailers to invest and innovate in services that unlock the benefits of the demand-side, driving down costs for all consumers no matter how they engage.