Ofgem Proposes New Rules to Protect Energy Consumers
The UK energy regulator, Ofgem, has unveiled a series of proposals aimed at providing greater protections for households and businesses as gas and electricity charges peak during the winter months. The move comes in response to complaints about poor customer service standards and aims to ensure that consumers can contact suppliers and receive support if they are struggling to pay their energy bills.
One of the key measures proposed by Ofgem is the introduction of minimum capital requirements for energy suppliers. This requirement is intended to improve the resilience of suppliers to market shocks, following the collapse of multiple suppliers last year when raw energy prices surged due to the war in Ukraine. By enforcing minimum capital requirements, Ofgem aims to create a more stable energy market that benefits consumers.
In addition to the capital requirements, Ofgem also plans to protect households’ credit balances by ordering suppliers to ringfence a portion of those holdings. This measure is designed to safeguard customers in the event of supplier failures, ensuring that their credit balances are not lost.
For non-household customers, including businesses, Ofgem will be examining broker practices to address concerns about excessive commissions being added to energy bills. This move aims to promote transparency and fairness in the energy market, particularly for businesses that have experienced slower reductions in energy costs compared to households.
Ofgem is also focused on improving customer support for those struggling with energy bills. The regulator plans to implement early intervention measures to identify and offer support, such as temporary repayment holidays, to consumers who are unable to pay their bills. By providing effective support, Ofgem aims to alleviate financial burdens and prevent vulnerable consumers from falling into energy poverty.
Neil Lawrence, Director of Ofgem, emphasized the importance of good customer service and the need for energy suppliers to raise their standards. He stated, “Good customer service is important for all consumers, but it can make a critical difference to welfare and the safety of the most vulnerable. We expect every company to provide a consistent service that customers can rely on, and this mission should be driven from the top.”
Ofgem aims to implement these recommendations before the onset of the cold winter months, ensuring that consumers are better protected and supported during this critical period. By introducing these new rules, Ofgem seeks to create a more stable and consumer-friendly energy market in the UK.