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.
What Is Ofgem?
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.
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.
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.
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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.
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
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.
Frequently Asked Questions
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.
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.
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.
In January 2023, it is said to be around £5,387 a year.
Ofgem sets the prices, and they do this every six months.
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