Ofgem Transformed to Strengthen Protections for Energy Consumers

Billpayers set to benefit from a stronger energy regulator to ensure they are treated fairly

Billpayers are set to benefit from a stronger energy regulator, under reforms of its remit set out by the government today (22 April). 

The transformation will empower the regulator to ensure energy consumers are treated fairly, including measures to guarantee good practice in the market. This is the first major update to Ofgem’s scope since the regulator was founded in 2000. 

The comprehensive overhaul will give Ofgem new powers to act as a true consumer champion, including: 

Since Ofgem was established, the market has grown more complex, with a wider range of products and services for consumers to choose from – with growing numbers of customers in parts of the market which are covered by little, if any, regulation. 

That includes heating oil customers, who have seen prices spike following the start of the ongoing conflict in the Middle East. Last month the government announced funding worth over £50 million to support low-income families reliant on heating oil, and committed to introducing new consumer protections to the sector.  

The changes announced today mark another step in that process, transforming Ofgem so that it is fit for the future and can ensure all consumers in today’s energy market are supported. 

Energy Secretary Ed Miliband said: 

Minister for Energy Consumers Martin McCluskey said: 

Interim Ofgem CEO Tim Jarvis said: 

To deliver the shift, Ofgem’s remit will be streamlined to focus on its core functions as an economic and consumer protection regulator. This involves removing Ofgem’s responsibility for oversight of home upgrade schemes in a role that is set to be performed within government by the Warm Homes Agency. 

This will help equip Ofgem to drive forward clean power and economic growth, ensuring regulation supports innovation, unlocks investment in Britain’s electricity networks, and helps to modernise the energy system.  

Ofgem’s capabilities will also be reformed, with its technical expertise strengthened, its use of data improved and its approach to risk reassessed – enabling the regulator to take faster decisions in the interests of consumers. 

They will also develop a workforce plan, building on changes already underway, to ensure staff have the right skills to deliver the changes required, supported by stronger board‑level oversight of skills and culture. 

The changes build on the reforms the government and regulator have already delivered to rebuild the energy retail market and improve standards in the sector – driving customer satisfaction with their suppliers to record highs.   

They follow the government’s proposals to protect energy consumers with fairer, quicker and easier access to compensation when they are let down, as well as Ofgem’s plans to make sure suppliers’ Guaranteed Standards of Performance reflect the evolving energy system. 

The plans come as the government is continuing to fight people’s corner in response to the impacts of the conflict in the Middle East. Yesterday (21 April) the Energy Secretary set out plans to go further and faster on the mission to make the UK a clean energy superpower and protect people from the increasing global fossil fuel price shocks. 

Gillian Cooper, Director of Energy at Citizens Advice said: 

Laura Sandy CBE, Chair of the Energy Network Innovation Taskforce and Green Alliance said:

Notes to Editors

At the start of this month, action taken at the Budget saw the price cap fall by 7%, supporting households with lower bills until the end of June. 

It is not just households the government is acting to protect, but businesses too – with the Energy Secretary and interim Ofgem CEO Tim Jarvis writing to energy suppliers last month setting the clear expectation that their business energy customers are treated fairly. The Energy Secretary and Tim Jarvis’ joint letter is available here: Open letter to Third Party Intermediaries (TPIs): supporting consumers 

Ofgem’s latest data on customer satisfaction is available here: Customer service data 

Last year the government announced proposals to protect working people with fairer, quicker and easier access to compensation: Delivering an energy market that works for consumers - GOV.UK 

Ofgem is reviewing the supplier Guaranteed Standards of Performance, which set minimum standards that all suppliers must meet for specific services or pay £40 automatic compensation if they failed to do so: Reviewing the supplier Guaranteed Standards of Performance (GSoP)