UK energy regulator wants national 'energy buyer' to avoid shortages

Britain's energy regulator, Ofgem yesterday recommended far reaching energy market reforms to consumers, industry and government to tide over the unprecedented global financial crisis, to meet tough environmental targets, and to reduce dependency on gas import.

In its latest Project Discovery report published yesterday, the regulator cast its doubt over whether the current energy arrangements will deliver secure and sustainable energy supplies.

The central buyer suggestion is the most radical of a series of proposals.

While significant legal issues would need to be addressed, this option has the potential to offer the greatest certainty for investors as it would see a central energy buyer determining the amount and type of new generation needed and entering into long-term energy contracts for power.

The range of options put forward by the regulator for further discussions also include improved market signals, obligations on suppliers, and capacity tenders to give greater confidence to help meet the carbon targets.

''Britain has a window of opportunity to put in place far reaching reforms to meet the potential security of supply challenges we may face beyond the middle of this decade,'' Ofgem's chief executive Alistair Buchanan said.