The Department for Energy Security and Net Zero (DESNZ) and Ofgem are seeking views from the energy industry regarding proposed code manager standard licence conditions and code modification appeals.
The modifications are being proposed following several consultations over the years, the last of which took place in April 2025. These aim to support the UK in its energy transition so it can capitalise on the economic opportunity of renewable energy.
It is also crucial to ensure the grid and its frameworks are fit for purpose in an ever-changing energy landscape brought about by the rapid adoption of clean energy. With the Labour government also intending to make the country a “renewable energy superpower,” the need for a progressive framework will be critical to securing this.
Indeed, in 2021, Ofgem and DESNZ, then the Department for Business, Energy and Industrial Strategy, said that while the codes have thus far done a “remarkable job guiding the industry post-privatisation,” they were not designed to deal with Britain’s increasingly decentralised and distributed energy system.
As such, the framework has become complex and fragmented, and it lacks incentives to innovate, so there is an urgent need to update it.
You can learn more about the code modifications and how to submit feedback on the government’s website.
Proposed changes to the code manager licence
The latest development in this code modification overhaul sees Ofgem and DESNZ seeking feedback on 12 code modification changes.
These can be categorised into code manager budgets, conflicts of interest, code manager objectives, delivery plans, controls on the business, procurement, optional charging, performance, ease of use of the code, end of licence, code maintenance and modification, and the provision of information to and cooperation with the Competition and Markets Authority (CMA).
The document states that code manager budgets should be transparent and subject to appropriate scrutiny, ensuring economical and efficient costs. The consultation also addresses the possibility of adding an appeal mechanism and re-examining Ofgem’s budget oversight. Another modification aims to ensure code manager independence and prevent conflicts of interest that could negatively impact a licensee’s ability to deliver duties.
Under the code manager objectives category, Ofgem and DESNZ propose that licences include the core objectives for code managers to consider while carrying out their duties. These will set out the role’s high-level functions and characteristics, promote positive consumer outcomes, and support the delivery of Ofgem’s new annual Strategic Direction Statement (SDS).
Ofgem’s SDS is an annual publication that outlines the regulator’s assessment of government policies and industry developments that may require changes to energy codes. It serves as a roadmap for Ofgem’s actions and responsibilities regarding managing and modifying these codes, ensuring they align with the evolving needs of the industry and government objectives.
Regarding the delivery plan, the document specifies that the codes must align with government policy priorities, following the direction established by Ofgem’s SDS. Code managers will need to create and execute delivery plans that facilitate this.
Another proposed modification aims to ensure that code managers are financially stable and adequately resourced to fulfil their responsibilities. As such, the two parties suggest that licenses will include specific controls on the business, similar to those found in existing energy licenses.
For procurement, the two organisations stated that although Ofgem does not license third parties and is not subject to the same regulations as code managers, they believe the license should impose restrictions and requirements regarding procurement. This aims to prevent negative consequences when licensed functions are outsourced.
More on this set of code modifications can be found in the official document here.
Proposed code modification appeals to the CMA
Changes to the code modification process introduced by code governance reform mean that the CMA appeals framework needs to be updated. The two organisations are also seeking feedback on four changes to the appeals framework.
This includes codes in the scope of the appeals process, eligibility to appeal, appeals triggers and exclusion criteria, and alternative modifications.
Under the codes in scope of the appeals process, the organisations propose retaining the existing codes in scope for the appeals to the CMA process and bringing the Retail Energy Code (REC) into scope.
In addition, the document outlines changes in appeal eligibility. The groups propose no changes to eligibility criteria, as the new appeals process does not introduce new appellants or remove existing rights, leaving no reasonable basis for modification.
The final two modifications encompass the appeals triggers and exclusion criteria as well as alternative modifications.
For the appeals triggers and exclusion criteria, the document specifies that the code manager’s recommendation will replace the current recommendation from the code panel, which will be eliminated, to serve as the basis for the appeal trigger.
Finally, regarding alternative modifications, the groups suggest that when such modifications are proposed, the code manager should have the discretion to recommend multiple modifications for approval if they are deemed equally beneficial compared to other modifications and the current state in achieving code objectives.
