Policy background Part 6: Governance of Gas and Electricity Industry Codes
The Act makes provision for the establishment of a new governance framework for the energy codes. It does this by granting GEMA, Ofgem’s decision-making board, a collection of new code-related functions, such as the ability to direct strategic change across the codes, and by creating code management as a new licensable activity. It also includes transitional powers that will make it possible for the GEMA to facilitate the necessary changes to implement the new code governance framework.
	The energy codes are the detailed technical, operational and commercial rules of the electricity and gas systems, which cover areas like generation, transmission, distribution, supply and retail. They are documents that in most cases act as multi-lateral contracts between industry signatories, each of which is governed by some form of industry-led panel or board with the support of an appointed ‘code administrator’.
	In the Energy White Paper 2020 12 the Government stated that the energy codes needed to be overhauled to allow Great Britain to transition to a clean energy system and to enable strategic alignment with its net zero ambitions. The Government and the GEMA published two joint consultations on energy code reform: the first 13 in 2019 and the second 14 in 2021. Both consultations built on the recommendations of a 2016 report by the CMA which found that the existing system of energy code governance was adversely impacting competition due to conflicting interests; a lack of incentives to deliver policy changes; and the GEMA’s insufficient ability to influence code change processes.