UK Watchdog Probes Energy Regulations

UK energy regulator Ofgem is to conduct a review into the regulation of the country's gas and electricity networks to ensure it meets future government and industry demands.

The two-year review is set to examine whether the 20-year-old system of delivering services to consumers is working in the light of growing investment challenges faced by energy networks in the future, says Ofgem.

"The challenges for the future include ambitious new government renewables targets for 2020, proposals for greater power network interconnection in Europe, a greater emphasis on small-scale distributed generation and growth in gas imports.

"We need to know that the regime can continue to promote innovation from the companies at the level that is required for the future," says Ofgem CEO Alistair Buchanan.

Ofgem says work for the next price controls for electricity distribution, due to come into play in 2009, will not be affected by the review.

Last month Ofgem announced an investigation into the UK's gas and electricity markets, following price hikes by the major domestic energy companies.

By Ozge Ibrahim