The Government has launched the first comprehensive review of Ofgem, the energy regulator, today. The review aims to establish Ofgem as a strong consumer champion, driving up standards for household and business consumers both now, and as energy use evolves with smarter and greener technology.
The significant rise in energy costs in 2022, and the supplier failures that resulted from it, damaged confidence and exposed that the regulator is no longer fully equipped to protect consumers in today’s market.
Bad practice by some suppliers has eroded trust, including the forced installation of pre-payment meters and taking too long to refund excess credit or correct bill errors. The review will ensure Ofgem is equipped to address these unacceptable outcomes for consumers, including the ability to order companies that are guilty of wrongdoing to refund or compensate customers directly.
There will be a strong focus on delivering improvements to what matters to working people, from paying bills and resolving complaints to upgrading their homes and cutting energy costs with a new boiler, heat pump or solar panels.
The review will also consider how Ofgem can better drive the government’s missions for clean power and economic growth by supporting the private sector to invest in the energy infrastructure we need and ensuring that people who want to upgrade their homes with clean technology can do so safe in the knowledge that they are protected by robust and responsive regulation.
Minister for Energy Consumers, Miatta Fahnbulleh said, “The review of Ofgem will set it up for the transition to net zero and establish it as a champion for households and businesses by fixing the broken energy market and putting consumers first.”
Jonathan Brearley, CEO of Ofgem, said, “Ofgem welcomes this review. A great deal has changed since our remit was set 25 years ago, and will continue to change as we move to new ways of generating and using energy. The energy crisis served as an important reminder to all that protecting consumers must remain the focus no matter what challenges we face, so that every household receives the service and support they rightly expect.
“We have already made significant reforms to stabilise the market, drive investment in our infrastructure, and begin to improve standards, however we know more can be done with more powers. We’re committed to keeping consumers at the heart of everything we do, and working together with government, industry, and consumer groups and charities to shape a future energy and retail market that delivers for everyone.”
Planned reforms will build on the Prime Minister’s challenge at the International Investment Summit, where he set out his ambition to ensure the UK’s regulatory regime is fit for the modern age, creating the right conditions for growth, investment, and innovation.
Proposed new measures to enhance Ofgem’s consumer protection powers will include shortening the eight-week response time for complaints and strengthening the energy ombudsman.
The review will also examine Ofgem’s role in approving new infrastructure projects and improving the connections process, ensuring that the regulator plays a key role in fostering growth and delivering the government’s clean energy mission.
The government will also investigate strengthening and expanding automatic compensation. When things do go wrong with suppliers, consumers will have quicker and easier access to redress. Reforms will simplify the framework for compensation, which currently varies across issues and areas of the energy market and make it easier for people to get the compensation they are entitled to.
