Concerns raised over Ofgem’s Sandbox proposal

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Concerns have been voiced by industry stakeholders regarding Ofgem‘s proposal for the Future Regulation Sandbox (FRS).

The FRS is described as an innovative policy mechanism aimed at testing and trialling changes to the energy rulebook before their implementation.

It is proposed to work alongside existing tools such as the Energy Regulation Sandbox (ERS), Fast Frank Feedback (FFF) and Strategic Innovation Fund (SIF), enhancing the range of innovation support mechanisms available.

While acknowledging the need for innovation within regulatory frameworks, some express reservations about the FRS’s regulator-led nature.

Worries include the risk of a centralized approach overlooking detailed industry insights, a potential hindrance to innovators, and a perceived culture of risk-aversion within relevant policy teams.

In the summary of responses published by the energy regulator, it is stated: “Other stakeholders cited concerns, cautioning against the regulator stepping into a trial design role: industry are best placed to suggest and trial solutions; the risk of a centralised approach to innovation and regulatory change focusing on macro thinking at the expense of opportunities for innovators that may lie in the details of rules; a risk-averse attitude across relevant policy teams (both within Ofgem and within other bodies which oversee rules), which would require a culture/attitude change for the FRS to be successful.”

Additionally, stakeholders stress that the FRS should not be the sole avenue for innovation, advocating for its selective use due to resource requirements.

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