Ernst & Young comments on Ofgem's announcement - Ernst & Young - United Kingdom

Commenting on today's report, Bill Easton, a director in Ernst & Young's power and utilities team said:

"Today's announcement could well come to be seen as a watershed in the development of the UK energy industry.  The scale of the investment challenge has been recognised for some time, indeed Ernst & Young's Costing the Earth analysis recognised the need for a £200bn investment programme to deliver a low carbon energy sector in 2008. 

“However, Ofgem's report provides the first public acknowledgement of what many in the industry have been thinking privately, that there is simply too much uncertainty to be confident that the necessary changes will happen in time.

"Since the Energy Review in 2007, the government has published a number of significant guidance documents outlining the direction in which it would like the industry to develop.  However, this review is all about how change can be made to happen, the government's ability to influence events and the industry's ability to make the necessary investments with a reasonable degree of confidence in the likely returns.

"Energy policy needs to balance potentially conflicting themes around affordability, de-carbonisation and security of supply.  Today's announcement focuses on the last of these, but it is crucial that in deciding on any future changes, all of these themes are considered in order to make sure that this exercise removes future uncertainties.  The other critical challenge is making sure that any changes are decided and implemented as soon as possible, as until then, planned investments will inevitably be delayed."