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All about Ofgem the energy market regulator

You've likely heard of Ofgem when it comes to news about the energy market or energy suppliers — find out what their exact role is in the energy market and how it impacts your household.

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Ofgem, or the Office of Gas and Electricity Markets, is the energy market regulator. That means Ofgem is responsible for keeping in check the big energy companies that keep our lights and heat on.

What is Ofgem and why do we need it?

Ofgem is the official regulatory body for the electricity and natural gas markets in Great Britain. In other words, it is the energy regulator.

It is an official government regulatory body, like Ofcom or the FCA and, as such, has certain powers and duties. They are governed by the Gas and Electricity Market Authority (GEMA), and are funded by a levy on the energy companies it regulates. The levy is paid annually, but Ofgem is independent of the energy suppliers.

Ofgem’s history lies in the liberalisation of the gas and electricity market in the UK in 1996. Until then, almost all gas and electricity was provided by British Gas. When the market was opened up to competition, and households were given the ability to choose their supplier, a regulator was required.

At the time, Ofgem was responsible for setting the maximum price, but these controls were removed between 2000 and 2002.

Today, Ofgem is responsible for protecting consumers' interests — this can be through investigations into supplier behaviour, imposing fines on suppliers that have breached their licence conditions and promoting and sustainability and support for vulnerable consumers.

What powers and responsibilities does Ofgem have?

The principle objective of Ofgem is to protect consumers of gas and electricity.

According to Ofgem the regulator does this by:

  • Promoting security of the UK's energy supply, and ensuring it's sustainable for future users
  • Promoting value for money when it comes to energy tariffs
  • Supervising and developing competition within the market
  • Regulating government schemes and helping deliver them

Ofgem and the Confidence Code

In 2013, Ofgem also took over the Confidence Code, a voluntary code of practice for energy price comparison sites, including uSwitch.

The Confidence Code sets requirements on price comparison sites to follow key principles to ensure switching energy supplier is an easy, reliable process for consumers.

The regulator reviews the Code periodically so that continues to provide value to consumers.

How does Ofgem affect me?

As the energy market regulator, Ofgem is the government body standing between energy suppliers and customers.

Ofgem is the organisation that ensures that any new energy company complies to certain standards, or that energy companies are responding to complaints and fulfilling their social and environmental obligations.

For example, energy companies are responsible ensuring low-income households get support for energy-saving upgrades (ECO), and must pay customers who generate their own energy a fee (Feed-in Tariffs). Ofgem ensures that energy companies comply with these obligations.

Ofgem also ensures that energy companies comply with their daily obligations when it comes to approaching new customers or dealing with existing customers, and has the power to set fines for non-compliance.

For instance, Ofgem has fined energy companies for mis-selling to customers by doorstep and phone.

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