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Ofgem
Ofgem is the
statutory agency established to protect electricity and gas
consumers by:
 | Promoting competition. |
| Regulating the monopoly companies which run the gas and
electricity networks. |
In addition, Ofgem has a number of other functions:
| Helping to secure Britain’s energy supplies by promoting
competitive gas and electricity markets - and regulating
them so that there is adequate investment in the networks. |
| Contributing to the drive to curb climate change and
other work aimed at sustainable development. |
| Helping gas and electricity industries to achieve
environmental improvements as efficiently as possible. |
| Taking account of the needs of vulnerable customers,
particularly older people, those with disabilities and those
on low incomes. |
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ROCs
In 2002 the
Government introduced the concept of ROCs (Renewable
Obligation Certificates) to encourage the development of
renewable energy within the UK and help reduce carbon
emissions.
The ROCs scheme works by placing an obligation on all
electricity suppliers in the UK to demonstrate every year that
they have purchased a required percentage of electricity
supplied from renewable sources. The required percentage
increases every year as set out in the table below.
| PERIOD |
PERCENTAGE OF RENEWABLE ENERGY
REQUIRED TO BE SUPPLIED |
|
1 April 2006 to
31 March 2007 |
6.7% |
| 1 April 2007 to 31 March
2008 |
7.9% |
| 1 April 2008 to 31 March
2009 |
9.1% |
| 1 April 2009 to 31 March
2010 |
9.7% |
An electricity supplier must demonstrate fulfilment of the
obligations by declaring the requisite number of ROCs to Ofgem
which administers the scheme. ROCs are awarded to renewable
electricity generators who are accredited with Ofgem and for
every MWh of renewable energy produced Ofgem award one ROC to
the generator. Electricity suppliers have the option to meet
their obligations in one of a number of ways. They can buy
ROCs from accredited electricity generators or from the market
place, develop their own renewable generating plant or pay the
buyout price for the relevant year.
The Government set the value of a ROC at £30 in 2002 and the
price increases each year with inflation. In 2007 the value of
a ROC is about £34. This is called the buyout price. ROCs are,
however, bought and sold in the market place by large
generators, traders and electricity suppliers and the market
price does vary. The price in early 2008 was about £40 per MWh
or 4p per kWh. As the required percentage to meet an
obligation increases it is expected that the value of a ROC
will also increase.
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| Selling Surplus Electricity |
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