Reform to Energy Regular Will Give Consumers More Protections, Says Government

The review will also look into how Ofgem can help the government in its ‘clean power’ mission and support the private sector to invest in energy infrastructure.

A smart meter next to an energy bill in a file photo. Alamy/PA

Proposed changes to the remit and powers of energy regulator Ofgem will give more protections to consumers and improved customer service, the government has said.

The Department for Energy Security and Net Zero (DESNZ) announced the opening of a review of Ofgem on Thursday, with changes including the regulator being able to order energy companies guilty of wrongdoing to refund customers directly. Ofgem could also shorten the eight-week response time for when customers complain about their energy suppliers.

DESNZ said that the rise in the cost of energy in 2022, supply failures, the enforced installation of pre-payment meters, and taking too long to issue refunds or correct bill errors had eroded consumer confidence in services, and exposed that Ofgem is no longer equipped to protect consumers.

“Households have paid the price for the country’s broken energy market, with sky-high bills, suppliers collapsing, and poor customer service during a cost-of-living crisis,” the department said.

It added that the review “will establish Ofgem as a strong consumer champion, driving up standards for household and business consumers both now, and as energy use evolves with smarter and greener technology.”

‘Affordable, Smarter’ Energy

CEO of Ofgem Jonathan Brearley welcomed the review, saying the regulator had already made significant reforms to stabilise the market, as well as driving investment in infrastructure, and improving standards.

“We’re committed to keeping consumers at the heart of everything we do, and working together with government, industry, and consumer groups and charities to shape a future energy and retail market that delivers for everyone,” Brearley said.

Minister for energy consumers Miatta Fahnbulleh said that the government has listened to people’s concerns and learned from the energy crisis.

Fahnbulleh said: “We will ensure that working people have access to the best possible support to choose more affordable, smarter, clean energy that is right for them.

“Energy bills are still too high, and that is why we worked with suppliers to announce £500 million of additional winter support. The review of Ofgem will set it up for the transition to net zero and establish it as a champion for households and businesses by fixing the broken energy market and putting consumers first.”

‘Clean Power’ Mission

DESNZ said the review will also look into how Ofgem can help the government in its “clean power” and economic growth missions, by supporting the private sector to invest in new energy infrastructure.

In particular, it will look at the regulator’s role in approving new infrastructure projects.

It comes as the government published its plan to transition 95 percent of the UK’s energy supply sources to renewables by 2030.

Some of the measures include speeding up the planning and decision-making process which will lead to the building of more “clean” energy sources like wind and solar.

The government is also bringing back onshore wind, after the previous Conservative government had banned turbines from 2015 to 2024.

Vast amounts of infrastructure—such as more pylons and wind turbines—will be needed to be built to meet these targets, and will likely face challenges from local communities.

Announcing the measures on Dec. 13, Energy Secretary Ed Miliband said that he could have the ultimate say and bypass local opposition.

Winter Fuel Payments

While Fahnbulleh has said the government is committed to supporting consumers and providing cheaper energy, the Labour administration has come under criticism for means testing Winter Fuel Payments, reducing the number of pensioners in England and Wales receiving it from 11.4 million to 1.5 million.

Those on Pension Credit and other means-tested benefits will be eligible for funds, worth up to £300 this winter.

Teesside Wind Farm, England, on Oct. 6, 2020. Owen Humphreys/PA Media

When pressed on whether the government would reverse its position, pensions minister Emma Reynolds told the House of Commons on Monday, “We will not reconsider that decision, because as a result of the £22 billion black hole that we inherited from the Conservative Party, we have had to take tough decisions in a very tight fiscal environment.”

Reynolds added that people “have until Saturday to make a Pension Credit claim, which can be backdated and will passport them to winter fuel payments and other related benefits.”

The government estimates the changes will save the Treasury around £1.3 billion this winter and £1.5 billion in subsequent years.

However, the Social Security Advisory Committee, which provides advice on benefits to ministers, said in October that it is “not clear” how limiting access to the allowance will save money, given the rise in the number of those applying for Pension Credit.