Citizens Advice published its response to the Department for Business, Energy and Industrial Strategy (BEIS) consultation on the Review of Electricity Market Arrangements (REMA) on 11 October 2022, setting out its position as "the statutory consumer voice for energy in Great Britain"1.
The charity said it supports the goals of REMA, which it listed as delivering a decarbonised power system by 2035 at an effective cost, putting consumers at the heart of net zero by enabling all consumers, including those in vulnerable circumstances, to benefit from flexibility, and managing escalating constraint costs on the network1. It added that successful reform must be delivered fast enough to influence investment decisions made this decade, but warned that the impacts of any reforms will be long-lasting and that without careful design and testing, consumers, especially those in vulnerable circumstances, may end up worse off1.
Citizens Advice declined to back specific options at this stage, stating that it views it as too early to take definitive positions on specific reforms that BEIS is considering and that compelling evidence is required to exclude options1. It argued that consumer outcomes and the system value their actions will provide cannot be determined by viewing wholesale market reforms in isolation, and that reforms to the retail market and network planning must also be considered when assessing distributional impacts1. It identified two risks of not considering possible retail reform within REMA: locking in unfair outcomes, and limiting BEIS's ability to assess the system value of wholesale reforms, because this requires a full assessment of how consumers may respond1.
"Develop consumer engagements and protections as part of, rather than separate to, the REMA process"
The response makes three recommendations to BEIS: develop consumer engagement and protections as part of, rather than separate to, the REMA process; conduct distributional analysis which considers possible retail market futures in combination with any proposed changes to wholesale market arrangements; and take a proactive and transparent approach to understanding consumer interests, through the set-up of a consumer forum and the development of a framework for assessing what constitutes fair outcomes1. Citizens Advice also welcomed the inclusion of adaptability as a criterion for assessing policy options1.
Why it matters for households
REMA concerns the wholesale electricity market: the arrangements that set the price generators are paid and that ultimately feed through to household bills. Citizens Advice's argument is that decisions taken on that wholesale side cannot be judged fairly without looking at how costs are passed on to homes through the retail market1. For a household, the practical question is whether reforms change what a unit of electricity costs, what standing charges cover, and whether homes that shift usage, for example by charging a car or running appliances at off-peak times, are rewarded or penalised. The charity's warning about vulnerable circumstances points to the risk that households least able to change their usage patterns bear a disproportionate share of any new costs1. Its call for a consumer forum and a framework for assessing fair outcomes is an attempt to have household interests represented while the rules are still being designed, rather than after they take effect1.
What happens next
The response is dated 11 October 2022 and was published during the REMA consultation period1. Citizens Advice said it looks forward to engaging further as more detailed proposals are brought forward, and that it views it as too early to take definitive positions on specific reforms1. No timetable for the next stage of REMA, and no government response to this submission, is set out in the document1.