The voice of the energy industry

Ofgem policy interpretation and advice

Through our daily conversations, meetings and industry working groups, we get to hear the views of consumer groups and government, and of course many suppliers of all sizes. You wouldn’t be surprised to hear that it can be tough reaching consensus across this lot on some issues. But one subject we all seem to agree on is that it is in the interest of everyone that suppliers are able to get a full picture of what our regulator Ofgem is asking for. To make this happen, we’ve asked Ofgem to dedicate resource to providing policy interpretation and advice to energy suppliers.

Energy UK is always looking to encourage activities which will lower barriers to entry and growth in the electricity and gas supply markets so that new businesses can come in and offer innovative products to attract customers.

A problem that is continually mentioned by small suppliers as a barrier to entry and growth is the difficulty in knowing about and complying with the maze of complicated regulations. Anyone who has done any work involving the electricity and gas supply licence (currently standing at two-and-three-quarter inches on my desk) will understand. And this doesn’t include government legislation, supporting guidance, or industry codes.

The dedicated resource we’re asking for would give market players and potential market players someone to ask to make sure they’ve considered the full spectrum of regulation, and the intent behind Ofgem’s policy. It would also provide clarity where drafting of the regulation is unclear, or appears to conflict with other rules. Suppliers’ correct interpretation of the rules would benefit customers.

Another benefit is that it would allow issues to be resolved quickly and enable queries between the supplier and regulator to be addressed early on, rather than Ofgem having to proceed straight to enforcement. This would benefit customers in the long run.

Of course we need to be careful that Ofgem’s discretion to enforce isn’t compromised. Whatever resource they offer to help suppliers would need to be separate from their enforcement function to make sure conversations aren’t prejudiced. And we’re not asking for a high-intensity compliance regime as experienced by the financial services sector, where business plans are scrutinised by the FCA – it is suppliers’ responsibility to integrate their obligations into their business as efficiently and effectively as possible.

We want to be able to follow the rules as Ofgem intended and serve customers well.



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