Our approach to regulation

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We regulate only where necessary to protect consumers’ interests. We carefully consider whether any regulatory requirement we are proposing to introduce is proportionate and necessary to protect consumers.

We prioritise all work within a cost control regime that ensures our expenditure growth remains at three percentage points below the retail price index.

We are committed to setting out the costs and benefits, as well as the social and environmental impacts of all major decisions, through Impact Assessments.

As part of our better regulation work we develop an annual Simplification Plan to help reduce the burden of administration while ensuring consumer protection.

Cost control

In 2010, we made our second five-year commitment to an RPI-3 cost-control regime. This means we have to achieve real-terms savings of three per cent a year. The year to March 2012 was the second year of that commitment. So far, our savings add up to £4.9 million

The RPI-3 cost-control regime allows us to increase or decrease the overall budget cap to reflect major new pieces of work (or major reductions in our workload). If we need to change our budget, we need approval from our Audit Committee.

In 2011-12, the cost-control regime saw our budget cap reduced. Between 2012-13, we saw an increase in the RPI cap because of the costs involved in two major new pieces of work: implementing our Retail Market Review and administering the government’s new Energy Company Obligation scheme.

Compliance

Responsibility for ensuring compliance with relevant legislation, licences and codes is the responsibility of the companies that we regulate. We are helping suppliers to learn from and better manage the risks that have historically resulted in enforcement or compliance action through lessons learned engagement activities.

We may also use compliance tools to deliver corrective action, where a compliance breach has already occurred. We have set out our approach and expectations in an Open letter on regulatory compliance.

While compliance activity plays an important part in our role as regulator, there will also be circumstances where enforcement action is the most appropriate course of action, to deliver corrective action and to deter future non-compliance.

Enforcement

Our role includes ensuring that energy companies comply with the law. To ensure that this happens, we have the power to conduct investigations and carry out sanctions through enforcements. Find out more in our Investigations section and also on our Enforcement Overview pages (2014/15, 2015/16 and 2016/17).

In late 2014 we completed a major review of our approach to enforcement. For more on what this covered and to access all publications produced during the review, including our final conclusions and outputs, see Enforcement review.

Impact assessments

We have a duty to undertake impact assessments for every important policy proposal we make. We have developed a rigorous approach to these in line with best practice, while ensuring that our decisions are consistent with our wider statutory duties.

While impact assessments do not determine the final policy decisions we make, they are a vital part of the policy-making process and provide a valuable framework for assessing the impact of important policy proposals.

Simplification plan

We are committed to the principles of better regulation and continually seek to improve our efficiency and effectiveness. We publish an updated simplification plan on an annual basis. To find out more, see Corporate policy, planning and reporting.

Publications and updates

  • Published: 10th Oct 2017
  • Agendas, minutes and presentations
  • 2 Associated documents
Ofgem’s annual Compliance and Enforcement conference was held on 6 September 2017. Here we provide a summary note with the conference slide pack from the day.

  • Published: 22nd Aug 2017
  • Reports and plans
  • 1 Associated documents
Ofgem’s Enforcement Decision Panel has published its Annual Report for 2016/17.

  • Published: 30th Jun 2017
  • Charts and data, Investigations
  • 1 Associated documents
This is our third annual Enforcement Overview and it covers enforcement activity from April 2016 to March 2017.

  • Published: 8th Mar 2017
  • Reports and plans
  • 1 Associated documents
Ofgem has published a report on lessons learned from enforcement and compliance activity in relation to sales and marketing.

  • Published: 17th Feb 2017
  • News and blogs
  • 0 Associated documents
Ofgem has published a contract notice for the procurement of an expert independent service provider to manage and allocate voluntary redress funds.

  • Published: 30th Nov 2016
  • Decisions
  • 1 Associated documents
We have decided that we will procure an independent third party organisation to manage and allocate voluntary redress funds in the context of enforcement cases.

  • Published: 4th Oct 2016
  • Guidance
  • 1 Associated documents
Impact Assessment (IA) is a tool to help explain the effects of regulatory proposals which have an impact on consumers, industry participants, and on social and environmental issues.

  • Published: 14th Sep 2016
  • Agendas, minutes and presentations
  • 1 Associated documents
The annual Enforcement and Compliance Conference was held on 6th September 2016 at the Westminster Conference Centre, 1 Victoria Street, London.

  • Published: 6th Jul 2016
  • Reports and plans
  • 1 Associated documents
Ofgem's Enforcement Decision Panel has published its Annual Report for 2015/16.

  • Published: 30th Jun 2016
  • Open letters and correspondence, Reports and plans
  • 1 Associated documents
We are publishing an open letter to stakeholders to say what our new strategic enforcement priorities are for 2016/17 and why.

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