Regulation of energy suppliers

Public Accounts Committee Closed Inquiry
Opened: 9 Jun 2022 Closed: 24 Feb 2023 Parliament page
Since the summer of 2021 around 30 gas and electricity suppliers have exited the market in the ongoing energy supply and price crisis, affecting around four million customers. Most customers have been transferred to alternative suppliers through the Supplier of Last Resort process managed by Ofgem, the regulator for the … Read more
9 Recommendations
16 Conclusions
1 Report
1 Oral session
1 Event
Activity timeline 4 events
24 Feb
2023
Report published
13 Nov
2022
Report published
11 Jul
2022
Oral evidence
11 Jul
2022
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 1 session
11 Jul 2022
View on parliament.uk
Regulation of energy suppliers
Joanna Whittington · Department for Business, Energy and Industrial Strategy Jonathan Brearley · Ofgem Jonathan Brearley · Department for Energy Security and Net Zero Neil Lawrence · Ofgem Sarah Munby · Department for Business, Energy and Industrial Strategy
Title HC No. Published Items Response
Twenty-Fifth Report - Regulation of energy suppliers HC 41 13 Nov 2022 25 Responded
Recommendations & Conclusions
8 results
Clear
2 Recommendation Accepted
Twenty-Fifth Report - Regulation o…
Ofgem did not strike the right balance between promoting competition in the energy suppliers market...
Ofgem did not strike the right balance between promoting competition in the energy suppliers market and ensuring energy suppliers were financially resilient. During the 2010s, Ofgem focused on attracting new firms to the sector to increase competition and reduce costs … Read more
Government Response
The government agrees and states that Ofgem is developing new policies to create a more stable market, including proposals for an industry- wide minimum requirement for capital reserves. Ofgem is not proceeding with earlier proposals to ringfence customers’ credit balances but is instead consulting on new powers to direct ringfencing of credit balances, if needed.
HM Treasury
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3 Recommendation Accepted
Twenty-Fifth Report - Regulation o…
We are not convinced that Ofgem yet has the skills and capacity it needs to...
We are not convinced that Ofgem yet has the skills and capacity it needs to take a more proactive role in regulating the energy supplier market. Ofgem has around 1,400 staff and has submitted a bid to HM Treasury asking … Read more
Government Response
The government agrees and describes increasing Ofgem's retail compliance staff, though it notes budgetary limitations. It highlights Ofgem's enforcement actions and the creation of a financial resilience compliance team. It also mentions a current market compliance review into supplier BCPs, with planned improvement action plans.
HM Treasury
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5 Recommendation Accepted
Twenty-Fifth Report - Regulation o…
It is unacceptable that many vulnerable customers, on top of having to pay higher energy...
It is unacceptable that many vulnerable customers, on top of having to pay higher energy prices, face extra challenges working with energy suppliers and accessing benefits designed to help people with their energy bills. Vulnerable customers are most exposed to … Read more
Government Response
The government agrees and outlines existing schemes like the Energy Bills Support Scheme (EBSS) and the Energy Price Guarantee (EPG) to support vulnerable households. It also details efforts to ensure those with traditional prepayment meters receive vouchers, and alternative funding for those not eligible for EBSS.
HM Treasury
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6 Recommendation Accepted
Twenty-Fifth Report - Regulation o…
We are concerned that the Department and Ofgem do not yet have a clear vision...
We are concerned that the Department and Ofgem do not yet have a clear vision of how the energy retail market will work in the best interests of customers during the transition to net zero. The UK is seeking to … Read more
Government Response
The government will work with consumer groups and industry from April 2024 to consider the best approach to consumer protection, including different forms of targeted discounts, as part of wider retail market reforms. Ofgem has developed a consumer interest framework (CIF) which is currently undergoing user research.
HM Treasury
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7 Conclusion Accepted
Twenty-Fifth Report - Regulation o…
We asked Ofgem how it ensured the needs of customers were considered in the event...
We asked Ofgem how it ensured the needs of customers were considered in the event of an energy supplier failing. Ofgem told us that the SOLR and SAR processes had three main priorities: ensuring everyone was kept on supply; ensuring … Read more
Government Response
Ofgem and BEIS continue to work closely to ensure consumers are protected in the event of energy supplier failures through the SoLR and SAR processes, and have already introduced changes to licence conditions, assessment processes, and monitoring of financial resilience.
HM Treasury
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10 Conclusion Accepted
Twenty-Fifth Report - Regulation o…
Following the supplier failures that occurred in 2021, Ofgem implemented further measures to strengthen the...
Following the supplier failures that occurred in 2021, Ofgem implemented further measures to strengthen the financial resilience of the market. In December 2021 Ofgem published an action plan on financial resilience that set out how Ofgem would improve its collection … Read more
Government Response
Ofgem has already introduced changes to improve market stability, including changes to license conditions, an enhanced assessment process for supply licence applications, introduction of the Financial Resilience Action Plan, and new requirements on asset ownership.
HM Treasury
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12 Recommendation Accepted
Twenty-Fifth Report - Regulation o…
Ofgem told us that in order to undertake the functions being asked of it and...
Ofgem told us that in order to undertake the functions being asked of it and to “play the role we want to play” in the sector, it would need different resources and different skills in future.22 It explained that its … Read more
Government Response
Ofgem has undertaken a prioritisation exercise to flex resource where possible and in November 2022 approved an additional three full time equivalent staff for Retail Compliance focusing on financial resilience. Target implementation date: January 2023
HM Treasury
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21 Recommendation Accepted
Twenty-Fifth Report - Regulation o…
We asked Ofgem what it was doing to support vulnerable customers.
We asked Ofgem what it was doing to support vulnerable customers. Some stakeholders criticised Ofgem’s decision to add the SOLR cost levy to the electricity standing charge when customers cannot influence this cost by reducing their energy usage. Ofgem told … Read more
Government Response
The government is using all the levers available to make sure that vulnerable customers benefit from the energy support available, including the Energy Bills Support Scheme (EBSS) and the Energy Price Guarantee (EPG).
HM Treasury
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Government Response AI assessment · 23 of 9 classified
Accepted 8
Acknowledged 11
Deferred 4
Total 9 recs + 16 conclusions