In December 2006 Ofgem published its further proposals for modifying the gas and electricity supply licences. This included the draft text of the modified licences.
The key themes of our draft proposals and the Supply Licence Review are:
- Removal and simplification of licence conditions
Our proposals represent a reduction of about a half in the size of the standard conditions. We have also used clearer drafting to simplify obligations and produce better targeted regulation.
- Striking the balance between competition and regulation
Our proposals remove licence obligations where competition provides more effective protection for consumers. The customer's ability to choose and switch to the supplier of their choice in response to high prices or poor service is a key protection. Removing some of the restrictions will provide suppliers with more freedom to develop more innovative products.
- Protection of vulnerable customers - this remains an important objective for Ofgem. Our proposals streamline protection for customers who have difficulties in paying bills and support the provision of special services for the physically vulnerable. We aim for clear, targeted obligations to replace the current administrative requirements for a supplier to prepare seven separate detailed codes of practice that must each be approved, complied with, monitored and reported upon.
- Opportunity for self-regulation - our proposals have sought to rely upon self-regulation wherever appropriate.
- Promotion of innovation - we have sought to identify and remove licence conditions that could stifle innovation or the development of competition.
To help conduct the Review, Ofgem established a Steering Group comprising representatives of Ofgem, industry and customer representative groups. To assist the Steering Group a number of workgroups were established.
The Review is taking place over two years, with an estimated completion date of June 2007.