The watchdog said that, for the first time, its objectives will directly align the interests of consumers across the country with the UK's plan to get to net zero by 2050. The change comes in an amendment to the current government's energy bill.
Until now, Ofgem has been tasked with protecting the interests of existing and future gas and electricity consumers. It has also been told to protect these customers' interests by reducing greenhouse gas emissions in the supply of gas and electricity.
Now, it will also be tasked with protecting future consumers' interests by supporting the government to reach its 2050 net-zero target.
Jonathan Brearley, Ofgem's chief executive, said: "Our fundamental objective will always be to protect the interests of existing and future consumers. It is at the heart of everything we do.
"Ofgem welcomes this mandate, which brings us in line with the UK government's legal obligations and, for the first time, directly links consumers' interests to specific net-zero targets.
"We're clear [that] consumers are best protected by building a low-carbon, low-cost energy system, scaling-up long-term investment and stabilising prices with clean energy.
"The mandate sends a clear message: we must end our historic dependency on fossil fuels and stop our exposure to volatile global markets. We're laying the foundations for the energy system of the future.
"The net-zero mandate has overwhelming backing from every part of the energy industry, consumer campaigners and climate activists. It underlines net zero is the best option, not only from a climate perspective, but to ensure a secure, low-cost energy future."
Doug Parr, policy director at Greenpeace UK, said: "We're glad that the government has seen sense on this. Ensuring the UK's energy regulator has a legal requirement to help meet our emissions targets is critical to getting more renewables into our energy mix."
In April this year, a group of MPs had warned that the UK was likely to fail to meet its target of decarbonising the power sector by 2035 and urged the government to accelerate its low-carbon electricity plans – including handing Ofgem a net-zero mandate.
Ofgem flexed its watchdog muscles yesterday (6 June), fining energy giant SSE £9.8m for breaching its energy generation licence. The firm was found to have secured "excessive payments" from National Grid ESO in exchange for reducing output at Foyers pumped storage power station during periods of what is known as 'transmission constraint'.
At the end of May, offering some relief to households, Ofgem revealed that it would lower its energy price cap from the current £3,280 per year to £2,074 for the average household in England, Wales and Scotland from 1 July.
