The Energy Regulation and Markets Review - Stikeman Elliott

Chapter 26
United Kingdom
Elisabeth Blunsdon 1
I
OVERVIEW
Great Britain’s gas and electricity markets were among the first to be liberalised and
unbundled in the European Union. Much of the experience gained from this process has
been influential in the development of unbundling in the rest of the EU. Now, however,
the markets face significant change as the need to achieve binding carbon reduction
targets during the worst economic downturn in a generation becomes pressing. The
government faces the unenviable task of guiding the sector through this period, but it
is fair to say that both market participants and potential investors are struggling to find
clarity in the current situation.
II
REGULATION
i The regulators
There is a single regulator for the electricity and gas sectors in mainland Great Britain. 2
GEMA, the Gas and Electricity Markets Authority, was established by the Utilities
Act 2000 (as amended) 3 and transferred the functions previously undertaken by the
Director General of Gas Supply, acting through the Office for Gas Regulation (Ofgas)
and the Director General for Electricity Supply, acting through the Office for Electricity
Regulation (Offer) into a single body. GEMA is entrusted with various statutory duties,
of which more later, but acts through the Office of Gas and Electricity Markets (‘Ofgem’).
1 Elisabeth Blunsdon is of counsel at Hogan Lovells.
2 Mainland Great Britain means England, Wales and Scotland. Northern Ireland’s energy
markets are regulated separately.
3 Section 1 of the Utilities Act 2000.
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