Energy industry regulator Ofgem has this week announced a series of reforms to improve its customer service for businesses and households.
The announcement follows consultations with energy suppliers, business and consumers, and has led to the publication of proposals to reform the non-domestic market, to make sure customers can access payment support, and to ensure energy suppliers are financially secure.
The regulator said the proposals would “establish expectations to ensure all consumers receive a consistent and acceptable level of service regardless of the company they are with”.
On company finances, the regulator said that it would ask energy suppliers to hold a sufficient level of capital to “ensure they are more resilient to severe but plausible market shocks.” Ofgem will also have the power to direct suppliers to ringfence a portion of their customer credit balances.
Ofgem said it was announcing the reforms ahead of the winter period, when many households are again expected to struggle to pay their energy bills. The regulator said it wanted to drive up standards for customers, especially those in a vulnerable situation, and to strengthen protections for business customers.
For households, the new rules will mean that energy supplier enquiry lines will stay open longer, including evenings and weekends, and be easier to contact via different methods. There will be more effective support for vulnerable customers like repayment holidays, emergency support for customers who are cut off from their power supply, and better information to inform customers who want to switch supplier.
Ofgem has also been working with the industry to adapt the non-domestic Retail Energy Code to avoid delays and unreasonable requests for documentation during tenancy changes.
The regulator will also consult further on improving complaint handling between suppliers and businesses, extending micro business protections to all businesses so bills spell out what is paid to energy brokers, and allowing businesses to resolve disputes through a redress scheme.
Ofgem is also asking the government to step in and regulate parts of the retail energy market which it does not have the power to regulate, like energy brokers, and for businesses to be given access to the energy ombudsman.
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. 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,” Lawrence added.
Ofgem chief executive Jonathan Brearley has been visiting businesses in Manchester, where he also met 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. Ofgem has led the way on efforts to hold energy companies to account. Reforms that properly protect the rights of consumers could not be more vital and I welcome them wholeheartedly.”
The new rules on minimal capital allowances for energy suppliers will take effect from 31 March, 2025, and follows Ofgem’s open letter to suppliers on 4 July, warning that the regulator would act to make sure suppliers have sufficient capital if they use profits for paying dividends.
