Ofgem announces new rules to improve customer service for homes and businesses
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Energy regulator Ofgem has today (Wednesday 26 July) proposed a
series of reforms to further improve standards of customer service
for both businesses and households. Following extensive
engagement with energy suppliers, businesses, consumers and other
organisations, Ofgem is today announcing the publication of:
A Non-Domestic Market Review findings and
consultation: non-domestic refers to anything that is not a
household. Many businesses...Request free trial
Energy regulator Ofgem has today (Wednesday 26 July) proposed a series of reforms to further improve standards of customer service for both businesses and households. Following extensive engagement with energy suppliers, businesses, consumers and other organisations, Ofgem is today announcing the publication of:
Ofgem’s proposals would establish expectations to ensure all consumers receive a consistent and acceptable level of service regardless of the company they are with. The regulator is taking these steps to drive up standards before this winter to make sure customers – particularly those in a vulnerable situation – are properly served, and to strengthen protections for business energy customers. For households, the proposals include:
For the non-domestic market, some of the immediate changes Ofgem has taken to help the non-domestic energy market include working with industry to adapt the Retail Energy Code to avoid excessive delays and unreasonable requests for documentation during tenancy changes and urging suppliers to be more flexible with businesses who signed up for peak fixed rate prices. But there are issues flagged in the review that require regulatory change, so Ofgem is announcing it will consult on:
As Ofgem’s powers in non-domestic retail market are more limited than in the domestic sector, it is asking government to consider further protections in areas it doesn’t have the power to regulate, like energy brokers. Ofgem is also asking for businesses to be given access to the energy ombudsman. It also calls for further consideration for vulnerable domestic consumers on non-domestic contracts – like people who live in care homes, social housing and in mobile home parks – who are at risk of missing out on important protections. Neil Lawrence, Director at Ofgem, said: “Suppliers are short-changing too many of their customers, who deserve better. “Customers need more support when they are struggling and should be able to contact their supplier without frustration or undue delay when they need help. “The plans we are announcing put the welfare of business and domestic consumers first and set out a comprehensive package to tackle poor behaviour by energy suppliers. “Good customer service is important for all consumers, but it can make a critical difference to welfare and the safety of the most vulnerable. “While we have seen good practice from some suppliers, we expect every company to raise the bar to provide a consistent service that customers can rely on – and this mission should be driven from the top. “We believe these recommendations can make a positive difference to consumers and we aim to have changes in place before the cold winter months return.” Ofgem chief executive Jonathan Brearley recently visited Manchester, where he met with several businesses and learnt first-hand about issues troubling the business community because of energy costs and severe stress caused by volatile prices. Mr Brearley also met with Sacha Lord, the Manchester Nighttime Economy Advisor, who has welcomed Ofgem’s market review. Mr Lord said: “These proposals would be a major step forward in ensuring customers are given fair and proper protections against energy companies who have not been as transparent as they could have been.
“Every week we are being contacted by restaurants, pubs and bar
owners up and down the country - the backbone of our hospitality
sector - who simply cannot see a viable way forward. In keeping with Ofgem’s commitment to build a healthy, financially resilient energy market, the regulator is also announcing the introduction of a new minimum capital requirement. This will comprise a Capital Floor of £0 and Capital Target of £115 Adjusted Net Assets per dual fuel equivalent customer. The new rules, which will take effect from 31 March, 2025, will ensure that companies have a level of capital to make them more resilient to any sudden changes in market conditions, such as the price shock in 2021 that prompted the failure of 30 suppliers. This follows Ofgem’s open letter to suppliers on 4 July, where chief executive Jonathan Brearley warned that the regulator is ready to act against suppliers that do not yet have sufficient capital if they use profits for paying dividends above recapitalising. While Ofgem has always been clear that reasonable profits are essential for a sustainable and well-functioning sector, the letter made clear that financial resilience must be prioritised. The minimum capital requirement builds on this mission to create long-term stability in the market by reducing the likelihood of future supplier failures and reducing the cost of failure should it occur. In addition, the power to direct suppliers to ringfence a portion of their customer credit balances gives Ofgem the tools to respond when suppliers operate unsustainably and over rely on these funds for working capital. ENDS Notes to editors Next steps are:
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