The Government’s announcement last week on the projected state of the UK energy industry is interesting and informative, but unlikely to radically change what we already know. Perhaps more interesting was to make the announcement without properly consulting Ofgem (making them look pedestrian whilst potentially widening Ofgem’s role in the industry). It seems ironic that Ofgem is arguably a bigger champion of the market place than the Government (ironic because arguably their role is to correct the mistakes of the markets and free economics). Interestingly, Ofgem understands that regulation comes at a cost, a rule imposed here almost certainly requires a cost there. The government is looking to implement change, recent examples like the CRC (Carbon Reduction Commitment) show willingness to impose a green agenda on those users who do not fall into an existing carbon scheme. However, they have underestimated the huge administrative burden on participants. This has huge cost implications to the UK as companies look to set up factories abroad. While the Prime Minister may lay claim that the UK is the most advanced in the G8 when it comes to a carbon economy, the other members will have the last laugh when Nissan 3M and other companies re-locate to Germany, Italy and the US. There is no doubt that Ofgem understands this better than most. read more ...