LONDON (Reuters) - Britain should radically reform its power sector soon to ensure secure, sustainable energy supplies in the decades ahead, energy regulator Ofgem said on Wednesday.

Ofgem said the financial crisis, increasing gas import dependency and the closure of ageing power stations demands far-reaching energy market reforms to meet tough environmental targets and keep the lights on.
“Prompt action will reduce risk to energy supplies, help lower costs to consumers and help progress towards climate change targets,” it said in a statement following extensive consultation and analysis.
“Our evidence shows that Britain has a window of opportunity to put in place far reaching reforms to meet the potential security of supply challenges we may face beyond the middle of this decade,” Ofgem Chief Executive Alistair Buchanan said.
“We do not advocate change lightly, but all the facts point to the need for reforms now to provide resilient supply security. Acting earlier will also help keep costs as low as possible for consumers and business.”
Buchanan said most people in the energy industry consulted since October 2009 agreed that leaving the present system of market arrangements and incentives unchanged will not deliver the secure and low carbon energy market Britain needs.
The regulator Wednesday put forward a series of proposals which it said could stimulate the estimated 200 billion pounds of investment needed by 2020.
The proposals include setting a minimum price for emitting climate-warming carbon in Britain, to reinforce the European Union carbon cutting incentive scheme, and replacing Britain’s Renewables Obligation program with tenders for renewable generation guaranteeing investors returns over 20 years.
It also proposed capacity tenders for all forms of power generation, gas storage and other gas infrastructure, to give greater investor confidence for delivering security of supply.
“If capacity tenders are deemed to be insufficient the most radical of the five packages would be a central energy buyer,” Ofgem said, adding this would involve co-ordinating all future investment through a single entity.