Implications of CMA and Summer Budget 2015 on UK energy sector

Energy implications of CMA and Summer Budget

Recent announcements by both the Competition and Markets Authority (CMA) and the UK Chancellor are likely to foreshadow dramatic changes to the UK energy market.

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Partner and Head of Power and Utilities

KPMG in the UK

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In July 2015, the CMA released its provisional findings and remedies for concerns about a lack of competition in the energy sector. A few days later, the UK Chancellor signalled significant changes in the Government’s approach to environmental taxation, and also funding for low carbon technologies under the Levy Control Framework (LCF). Both announcements are likely to herald major change in the UK energy market. Our report provides an overview of both, and their implications for the sector.

Key highlights:

  • The abandonment of the commitment made by the previous Coalition Government to increase the share of environmental taxes in the total tax take
  • A significant overspend projected for the LCF by 2020-21
  • The CMA finding that current energy market model does not damage competition, but that concerns exist at the retail end - where customers are overpaying by remaining on standard variable tariffs

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