Energy UK response to Ofgem: Call for input – Reviewing the supplier Guaranteed Standards of Performance

Executive Summary

GSoPs work best when applied to clear, predictable consumer harms that suppliers can reasonably control. Their efficiency declines when the cost of monitoring and enforcing a Standard exceeds the value of the compensation provided to the consumer. This is likely to be particularly so when applied to wider non-domestic customers than microbusinesses. Poorly targeted standards risk undermining the objectives of providing quick, automatic compensation.  

Where delivery is dependent on factors outside of suppliers’ control, GSoPs risk driving payments without driving improvement. To maintain their effectiveness, GSoPs should be targeted at areas where suppliers’ actions have a direct impact on the outcome, rather than issues outside of their control or highly complex processes. In addition, the recent Smart GSoPs should be given time to embed and demonstrate their effectiveness before considering further expansion.  

Also, it is important to clarify the scope and eligibility for any new standards, particularly for non-domestic customers where customer size and risk of harm vary widely. Other regulatory tools within Consumer Outcomes may be more appropriate than GSoPs. 

It would be inappropriate to tie suppliers to a universal GSOP framework for Suppliers servicing large Industrial and Commercial (I&C) customers because these customers negotiate and agree to bespoke, commercially specific SLAs within their individual supply agreements. Breaching these terms often results in penalties owed to the customer. Unlike domestic consumers who require blanket regulatory protection, I&C customers typically have sophisticated account management and tailored contracts that reflect their unique energy needs and priorities. Imposing a fixed, regulatory GSOP for these customers would supersede or conflict with their agreed-upon commercial terms, undermining the principle of commercial freedom and potentially leading to confusion about which standards i.e. contractual or statutory (as part of GSOP) take precedence. This approach would be disproportionate, as it fails to acknowledge the established commercial mechanisms for redress already agreed upon by informed business consumers and their suppliers. 

If you would like to discuss the above or any other related matters, contact us directly at rosie.nurse@energy-uk.org.uk and candice.orr@energy-uk.org.uk.