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What Is Ofgem?

In this business energy comparison guide, we will explore who Ofgem are, what they do and why they matter. From their role in regulating the energy market to their commitment to consumer protection and more. Read on to learn more about who Ofgem are, why they are so important and how fuel poverty is a real problem.

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In a world filled with acronyms, abbreviations, and industry-specific terminology, it can be easy to become lost in the buzzwords of any given sector. One such acronym you may have heard of is Ofgem, but what exactly is this organisation?

Who Is Ofgem?

They are the United Kingdom’s regulator for the electricity and gas markets (The energy industry/energy market).

What Does Ofgem Stand For?

The Office of Gas and Electricity Markets, or Ofgem.

What Does Ofgem Do?

Households in Great Britain face a leap in energy bills. Ofgem is the energy regulator in Great Britain. The company is also committed to helping households in the UK switch to renewable energy systems. Their job is to protect consumers (and vulnerable consumers), promote competition in the energy market, and make sure that the electricity and gas markets work well.

They do this by:

  • Making sure that energy companies/energy suppliers follow the rules
  • Working with the government to set the energy policies for the energy industry
  • Making sure that energy customers are treated fairly in the energy industry
  • Giving energy customers information and advice about their energy use to keep their energy bills down.
  • Taking decisions on price controls using the ‘RIIO’ model, which is a performance-based framework (making sure the price controls are fair). This means they can financially penalise companies that do not meet performance targets.
  • Conducting regular consumer surveys for consumer interests and future consumers interests (for energy customers)
  • Engaging with stakeholders on a range of issues.
  • Working with the CMA and environmental organisations.
  • Regulating monopoly companies who run the networks.

Ofgem makes sure that gas and electricity suppliers follow the rules set out in the Gas Act 1986 and the Electricity Act 1989. Ofgem also has the power to set the maximum prices that gas and electricity companies can charge consumers.

Ofgem runs programs to help low-income families be able to get access to insulation. This is to help lower energy bills. The company actually have a five-year plan that supports a low-carbon future. This ultimately means a cheaper future for all. The plan is set to start in 2023 ad run to 2028.

Ofgem is saying that consumers will see more reliable electricity networks due to the fact they are less likely to have power cuts. There will also be support for low-income families. The company doesn’t want anyone to miss out on these benefits. The idea is called the net zero energy system.

How can I switch to a cheaper energy tariff?

If you’re concerned about how much you’re paying for your energy, there are a few things you can do:

Check your current tariff: Are you on a standard variable tariff? These are usually the most expensive tariffs offered by suppliers. If so, you could switch to a cheaper fixed-rate tariff. Make sure to check what type of contract you have before switching – some fixed-rate tariffs may have exit fees if you leave before the end of the contract period.

Compare prices: Use an online comparisons site like uSwitch or MoneySuperMarket to compare energy tariffs and find the cheapest deal for your needs. Remember to enter accurate information about your usage so that you get accurate results.

Switch supplier: Once you’ve found a cheaper deal, contact your chosen supplier to start the switching process. This usually only takes a few weeks, and there is no interruption to your energy supply.

Want to learn more about making business energy savings? You could save up to 45% by finding the best deal with Business Energy Comparison. You can also compare business gas prices from all the leading gas suppliers.

What are the different types of energy tariffs?

There are three main types of energy tariffs: fixed, variable and dual. The two main types are fixed rate and variable.

A fixed tariff means that the price per unit of energy (e.g. p/kWh) is set for a certain period of time, usually 1-2 years. This can give you peace of mind, as you’ll know exactly how much your bills will be during that time frame. However, if energy prices go down during that period, you could be paying more than you need to.

A variable tariff means that the price per unit can change at any time – it’s influenced by the wholesale energy market. So if prices go up or down, your bills will follow suit. This type of tariff could work out cheaper overall, but you may need to budget for some fluctuation in your bills from month to month or year to year.

A dual tariff is a mix of both fixed and variable – usually, the unit rate is variable but with a set standing charge each month. This type of tariff could help protect you from sudden spikes in energy prices while still benefiting from any decreases.

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Ofgem Regulations

Ofgem regulates over 780 licensed electricity and gas suppliers, including all of the ‘big six’. They also regulate some independent generators and a number of companies that transport gas and electricity.

In performing their duties, they must have regard for the need to:

  • Protect existing and future consumers against poor service and high prices
  • Promote environmentally sustainable energy production
  • Secure adequate supplies of energy at least cost consistent with the long-term security of supply

In addition to these general objectives, they have a number of specific statutory duties, including:

  • Issuing licences to electricity and gas suppliers
  • Setting license conditions to protect consumers
  • Setting standards for the connection and disconnection of premises to gas and electricity networks
  • Registering power stations
  • Investigating suspected breaches of licence conditions or statutory requirements

How Can Ofgem Help Me?

If you’re a household energy customer in the UK, Ofgem is the government regulator for your electricity and gas markets.

They work to make sure that these markets work well for consumers by promoting competition and protecting your interests.

They help you with a range of issues related to your energy supply, including:

  • Switching your energy supplier
  • Resolving disputes with your energy supplier/ Making a complaint about your energy supplier.
  • Getting compensation if your energy supply is interrupted
  • Appealing against decisions made by your energy company
  • Media enquiries
  • Environmental and social scheme contacts

If you need help with any of these issues or have any other questions about your energy supply, Ofgem’s Consumer Contact Centre can give you advice and assistance.

You can contact them by phone or through their website.

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If you need to contact Ofgem, there are a few different ways to do so. You can give them a call at 080 223 1133.

You can also use the online webchat. They are open for calls from Monday-Friday between 09:30 and 16:30. Except on Wednesdays; they don’t offer afternoon services and therefore stop answering after 12:30.

They have offices in London, Glasgow and Cardiff.

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Price Increases

Just last year, October Ofgem announced that the price cap was going to be rising from £1,971 to £3,549 a year. That was an 80% increase. January 2023 is when it is supposedly set to increase to £5,387 a year.

Ofgem said that it couldn’t give exact predictions because the market is volatile. The electricity markets and gas markets are both subject to volatility. How many people will this actually affect? Exactly 24 million households.

This is exactly 85% of the population. Brearley (the chief executive of Ofgem) said, “Russia’s invasion of Ukraine and reduction of gas supplies to Europe had driven the rise in wholesale gas prices.”

What are some of the other reasons for the price changes in the energy market?

One cause is that there has been a post-pandemic surge in fossil fuel energy demand.

Another cause is the many factors that have affected energy production.

What does fuel poverty mean in the UK?

Fuel poverty is a condition whereby a household struggles to afford to keep its home adequately heated. In the UK, this is defined as a household spending more than 10% of its income on fuel.

There are a number of reasons why people may find themselves in fuel poverty. High energy prices, low incomes, and poor energy efficiency are all contributory factors. Fuel poverty can have a serious impact on health and well-being. For example, living in a cold home in Winter can make people sick.

So, yes, the energy market and price controls can go as far as to affect people’s health when the prices increase. Particularly for vulnerable groups such as the elderly and young children.

The government has committed to tackling fuel poverty and has introduced a number of initiatives to help households reduce their energy costs.

These include the Warm Home Discount Scheme and the Energy Company Obligation. However, with energy prices continuing to rise, many households are still struggling to make ends meet.

What if my energy supplier goes bust? 

Many energy suppliers/energy companies went bust recently. If this happens to you, then Ofgem will transfer you to different energy suppliers automatically.

A rule of thumb is to only switch tariffs when your account is completely moved over to the new supplier.

What are some renewable energy systems?

Solar, wind, and hydroelectric power are all common forms of renewable energy.

Solar power uses sunlight to make electricity, either directly using photovoltaics (PV) or indirectly using concentrated solar power (CSP).

Wind power is the conversion of wind energy into electricity, either by using wind turbines to generate electricity directly or by using wind pumps to pump water for hydropower.

Hydroelectricity is the generation of electricity from moving water, either by using dams to store and release water for downstream turbines or by using tidal barrages to capture the energy of tides.

Renewable energy systems have many benefits over traditional fossil fuel-based power generation. They are clean, emissions-free, and often have lower operating costs. These energy systems can also help to reduce dependence on imported fossil fuels and can increase energy security in the energy market.

Who Are Some Of These Energy Suppliers?

Here are some of the energy suppliers/ energy companies that form part of the energy market; Eon, EFD Energy, SSE, Pure Planet, Igloo, OVO, Npower, ENGIE Energy, Powershop, So Energy, Bristol Energy, Scottish Power, Daligas, Spark Energy, Shell Energy and many more.

Ofgem is the UK’s independent energy regulator. They are responsible for setting limits on how much energy suppliers can charge customers and ensuring that customers receive a fair deal from their suppliers.

Ofgem also has a duty to protect vulnerable consumers, such as those living in fuel poverty or with disabilities, from unfair practices or excessive pricing.

Whether you’re looking for advice on purchasing energy contracts or dealing with complaints against your supplier, Ofgem can provide invaluable help and support. Compare business energy suppliers and save big on your energy bills.

If you want to know more about the latest news in the energy industry, check out the Ofgem website.

Frequently Asked Questions

What is the role of Ofgem?

The role of Ofgem is to protect consumers by promoting competition in the energy markets and working to ensure that gas and electricity suppliers provide a high level of service. Ofgem also regulates the gas and electricity markets, ensuring that they work in the best interests of consumers.

Are Ofgem part of the government?

No, Ofgem is not part of the government. They are a non-ministerial government department. Ofgem is an independent statutory body that regulates the gas and electricity markets in Britain.

What powers does Ofgem have?

They can give financial penalties of up to 10% of a regulated person’s turnover, consumer redress orders and provisional/final orders can be issued for violations of relevant permit terms and other applicable requirements under the Gas Act 1986 and Electricity Act.

Who owns Ofgem UK?

Ofgem is governed by GEMA, which stands for Gas and Electricity Networks. The chief executive is Jonathan Brearley.

What is the Ofgem tariff cap?

In January 2023, it is said to be around £5,387 a year.

Why did Ofgem raise the energy price cap?

The price increase was due to the global increase in gas and electricity prices.

Who sets the Ofgem price cap?

Ofgem sets the prices, and they do this every six months.