Independent energy suppliers

Independent suppliers play an important role in the energy market; they can create better outcomes for consumers by bringing greater choice and diversity through driving innovation and increasing competition.

Supporting independent suppliers

Over the last few years we have seen unprecedented numbers of new companies enter the energy supply market.

We are continuing to work with the Department of Business, Energy and Industrial Strategy (BEIS) to reduce regulatory and market barriers that may prevent independent suppliers from competing effectively with larger, more established companies. This includes making information about proposed policy and regulatory changes more accessible.

As part of our commitments, we've developed the following guide to help independent suppliers:

  • better understand and comply with policy
  • input into policy decisions in the policy development process
  • engage with us on the issues independent suppliers face

We've included links to core documents and events, alongside contact details for relevant policy leads.

Key topics

Smart meter rollout

Suppliers are required to install smart meters in homes and small businesses by the end of 2020. Since April 2011, BEIS has been directly responsible for managing the implementation of the smart meter programme. We have been providing BEIS with independent regulatory advice and expertise. We have also taken on additional regulatory functions to support smart metering.

We requested that small suppliers provide a roll-out plan to Ofgem by 30 April 2016 so that we can see when suppliers plan to provide smart meters to their customers. If a supplier wasn’t supplying any consumers when we requested that information, they won’t have been required to submit a roll-out plan. Towards the end of 2016 we expect to request roll-out plans from any small suppliers that have started supplying customers in the interim. Our open letter sets out our observations on suppliers’ roll-out preparations and gives small suppliers some guidance on completing the roll-out plan template. We explain our overall approach to monitoring the roll-out in our decision document on supplier reporting during the roll-out.

Electricity Market Reform (EMR)

EMR is a government policy to incentivise investment in secure, low-carbon electricity to improve the security of GB's electricity supply and affordability for consumers.

Retail Market Reform (RMR)

Our review of the gas and electricity retail market introduced a set of rules to make the retail market simpler, clearer and fairer for consumers. These rules aimed to help consumers get a better deal from suppliers by reducing unnecessary complexity in tariff choices, enabling clearer, more relevant information on the available choices and ensuring fair treatment by placing legally binding obligations on energy companies.

Following the CMA review we have implemented changes to the Retail Market Review rules and we propose to make further changes. We had always envisaged that a number of the Retail Market Review rules would help to reset the market and would likely be removed over time.

Regulatory compliance

Energy companies are responsible for ensuring they comply with their licence conditions. We aim to support this in a number of ways, as detailed in our open letter on regulatory compliance. Here we also explain the roles and responsibilities that exist between Ofgem and licensees and outline the five principles which guide our approach.

Government environmental and social programmes

E-Serve is Ofgem’s delivery arm which administers a number of government schemes designed to achieve targets for an increase in renewables, energy efficiency and the uptake of social programmes.

Licensed energy suppliers in Britain are obligated to deliver measures under some of these schemes, whilst others are government initiatives and legacy schemes.

Obligations

Other schemes

Guidance

Government social and environmental programmes: Information for Independent Suppliers

Ofgem administers government environmental and social programmes, which place various obligations on licensed energy suppliers.

These schemes can sometimes appear daunting for independent energy suppliers to understand, so as part of our commitment to reduce barriers to entry and growth in energy markets, we've published a simple guide to the schemes. The guide provides an overview of which schemes will become relevant as suppliers grow, and outlines when and how they will need to take action.

Retail Market Review (RMR) rules derogations guidance

Derogation from the RMR rules is a direction from the Gas and Electricity Markets Authority (GEMA). These relieve a licensed supplier from its obligations to comply with certain licence conditions in specific circumstances and to a specified extent.

Suppliers (and, where applicable, their representatives) are required to comply with all RMR rules. However, a licensed supplier may submit a request for derogation.

For information on the aspects we consider in a derogation decision, please see Granted derogations.

REMIT

REMIT is a European regulation that prohibits market manipulation and insider trading in wholesale energy markets. Market participants trading in these markets are obliged to report transactions to the European Agency for the Cooperation of Energy Regulators (ACER)  and register with Ofgem. REMIT creates a framework for identifying and penalising market abuse in GB and across the rest of Europe. This helps consumers, industry and other participants have confidence that wholesale energy prices are open, fair and competitive; the foundations of an effectively functioning energy market.

Code Administration Code of Practice

This was developed by industry to facilitate convergence and transparency in code modification processes and to help protect the interests of smaller market participants and consumers through the adoption of key best practice principles. Code Administrators are required to provide a ‘critical friend’ role, providing assistance to small participants for example in the drafting of code modification proposals and their involvement in and representation during the modification procedure process.

Challenger Business Action Plan

This document sets out Ofgem and BEIS’s commitments to helping Independent suppliers enter and compete in the energy market.

Cornwall Energy’s Report: Credit and Collateral

This report, commissioned by the now defunct Department for Energy and Climate Change (DECC), gives options to improve credit and collateral arrangements in the energy industry. It maps arrangements across the GB electricity and gas industry and assesses their impact on different market participants. It also presents options to reduce the burden of credit and collateral arising from existing rules.

Roles of Ofgem, BEIS and other regulatory bodies

The table below details the different roles Ofgem and BEIS have in regulating the energy industry. Through our infographic guide, you can also find out who to contact and when.
For information on engaging with BEIS, please see their webpage for Independent Suppliers.

Ofgem BEIS
Economic regulator of gas and electricity markets in Great Britain

Sets strategic energy framework and policy

Protects the interests of consumers

Develops legislation to deliver policy aims

Power to take action under competition law

Develops legislation to set objectives and duties of the regulator

Influences European energy policy for the benefit of GB consumers

Appoints members of the regulator

Administers gas and electricity licences to energy businesses

Decides upon licence exemptions

Manages industry codes which contain the detailed rules governing market operation  

Other regulators

Competition Markets Authority (CMA) – has powers to take action under competition law. The CMA is investigating the retail energy market following our referral in June 2014.

Financial Conduct Authority (FCA) – has powers to investigate aspects of the energy market.

Ongoing engagement and events

We have an ongoing and extensive programme of stakeholder engagement through formal consultations, forums, workshops and published documents.

Consultations

To view upcoming consultations, and to sign-up for notifications as a consultation progresses, see: Consultations

Events

View meeting notes and presentation slides from the Ofgem-BEIS Independent Suppliers Forum.

Publications

Enduring information request

As part of our retail market review monitoring, in June 2014 we requested suppliers to regularly report information relating to customer numbers and switching activity.

This is mainly aimed at those suppliers with at least 100,000 customers in the domestic gas or electricity market segments and non-domestic suppliers with a market share of at least 1% in the non-domestic gas or electricity market segments. Nonetheless, we would also welcome voluntary submissions from smaller suppliers. Responding to the request is voluntary.

Ofgem Daily Update and newsletters

You can sign up to receive daily updates from Ofgem by policy area, and for subject specific newsletters, at our newsletter portal.

What else?

In addition to the above, we've appointed an Independent Supplier Champion, Rachel Clark. Rachel is responsible for ensuring that we fulfil our commitments under the action plan and engage better with independent suppliers as a group and as individuals.

Your contact details

If you think we’ve not got your correct contact details or if there is a change in personnel, please email us. This is very important so we can contact you to:

  • input into policy decisions
  • have information on upcoming events
  • be contacted for information requests
  • receive updates and news from Ofgem.

If you have thoughts on what more we could do through our stakeholder engagement, or through the information on this page, please let us know.

Publications and updates

  • Published: 1st Aug 2016
  • Guidance
  • 1 Associated documents
A simple, non-exhaustive guide for anyone looking to enter the retail energy market covering routes to market, indicative timescales and processes.

  • Published: 25th Jul 2016
  • Decisions
  • 4 Associated documents
We have reviewed the current objections regime as part of our ongoing commitment to ensure it is working in the best interest of consumers.

  • Published: 15th May 2015
  • Factsheets
  • 1 Associated documents
A simple guide to the Ofgem E-Serve schemes for independent suppliers. It provides an overview of which schemes will become relevant as suppliers grow, and outlines when and how they will need to take action.

  • Published: 27th Mar 2015
  • Guidance, News and blogs
  • 1 Associated documents
This is the first issue of the Ofgem-DECC Independent Suppliers Newsletter.

  • Published: 2nd Mar 2015
  • Guidance, Open letters and correspondence
  • 0 Associated documents
Information on our enduring information request to suppliers relevant to customer numbers and switching activities. We also also welcome voluntary submissions from smaller independent suppliers.

  • Published: 2nd Mar 2015
  • Guidance
  • 0 Associated documents
An infographic guide to key policy topics for independent suppliers, alongside relevant contacts at Ofgem and the Department of Energy and Climate Change (DECC).

  • Published: 27th Feb 2015
  • Closed: 24th Apr 2015
  • Consultations and responses
  • 18 Associated documents
Suppliers may object to a customer switching supplier. Most objections are debt-related. We want to look at whether this should continue or whether suppliers should find other ways to manage risk. We start by issuing this call for evidence.