Who are Ofgem?
Who are Ofgem?
Ofgem (which stands for the office of gas and electricity markets) are, in their own words, “Great Britain’s independent energy regulator” and are the national regulatory authority for energy. Its key role is to protect energy consumers and ensure fair competition among energy suppliers and within the energy market. This, in theory, means keeping energy bills in check by setting the energy price cap, ensuring tariffs are not set too high by the energy sector.
By closely regulating the energy market, Ofgem is meant to also stamp out any bad practice among energy suppliers and also look out for vulnerable consumers, who can be particularly susceptible to falling into arrears with energy bills. A recent example is the introduction of more stringent rules around the use of prepayment meters.
Ofgem also has responsibility as the regulator for the government’s net zero ambitions at the lowest possible cost to consumers, something it says it does by working with government departments, energy suppliers and consumer action groups, helping the journey towards decarbonisation while keeping a keen eye on the cost of government schemes, such as subsidising heat pumps and phasing out gas boilers.
Ofgem is overseen by the Gas and Electricity Markets Authority, while its funding comes from the licensed companies that it was set up to regulate, including domestic and non domestic energy suppliers, as well as the National Grid and smart meter communication companies. It also works with other regulators, such as Ofcom, Ofwat and Financial Conduct Authority as part of the UK Regulators’ Network.
How does Ofgem enforce regulation?
Ofgem has the power to investigate energy suppliers who may be breaching the terms of their licence conditions, as set out in competition and consumer law, thereby protecting the interests of consumers.
It has the power to enforce fines, as well as force suppliers to fulfil consumer redress orders to ensure that bill payers impacted by any issues are properly compensated.
In November 2024 it fined Farringdon Energy Limited £223,676 for taking direct debit payments from customers it no longer supplied or hadn’t started supplying. The idea is that this kind of strong enforcement prevents energy suppliers and other regulated bodies from breaching their terms.
Ofgem also produces and annual report, which ranks energy suppliers based on issues including customer service and their fair treatment of their consumers.
Does the government run Ofgem?
Ofgem bills itself as a ‘non-ministerial government department’. That means that it doesn’t have a government minister in charge of its day to day operations like, for example, the Department of Health.
While it is accountable to the government, Ofgem is designed to operate independently and without ministerial interference. This means that it is meant to operate without fear or favour, but does not have a role in setting energy policy. Other similar government offices include HMRC and the Food Standards Agency.
Do Ofgem set energy prices?
No, Ofgem does not set energy prices. These are largely driven by the global cost of natural gas and are subject to change due to major factors such as wars and trade disputes.
However, Ofgem does set the energy price cap, a form of price control. This is the maximum amount that suppliers can charge for a unit of gas and electricity and is reviewed every three months, with the aim of best reflecting the current state of the energy market.
Ofgem’s work on net zero and ensuring suppliers develop stronger renewable energy infrastructure is designed to bring greater security to the energy market with the aim of eventually driving down prices.
What is the Ofgem Confidence Code?
The Ofgem Confidence Code is a voluntary set of rules designed to ensure best practices among price comparison websites offering access to the best domestic energy tariffs. The code says that price comparison websites should:
Be independent and impartial
Be accurate and use the latest information
Display all available tariffs unless a consumer chooses to narrow their view
Be clear that they earn commission on each sale
Use clear and simple language
The full code can be found on Ofgem's website.
What's the difference between Ofgem and the Energy Ombudsman?
Ofgem oversees the energy market, energy companies and energy suppliers, ensuring they are regulated properly. Its role is ensuring that the energy industry works properly. The Energy Ombudsman, meanwhile, is an independent body designed to allow consumers to raise complaints at the highest level with energy suppliers, offering greater consumer protection in the process.
Can I complain to Ofgem about my supplier?
No, you can’t complain to Ofgem about your energy supplier. If you have an issue, you need to raise this directly with your energy supplier. If it cannot resolve the issue, then you can’t take your complaint to the Energy Ombudsman. It will be able to provide independent advice to you and is fully backed by Ofgem in its work.
