Our approach to regulation

Mae’r dudalen yma ar gael yn Gymraeg.

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: 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.

  • Published: 30th Jun 2016
  • Charts and data, Investigations
  • 1 Associated documents
This is our second annual Enforcement Overview which covers activity conducted by the enforcement team in financial year April 2015 to March 2016.

  • Published: 14th Apr 2016
  • Guidance
  • 1 Associated documents
This guidance explains how Ofgem will exercise its powers to approve and enforce voluntary redress schemes for infringements of competition law.

  • Published: 14th Dec 2015
  • Guidance
  • 1 Associated documents
An open letter setting out the process and principles involved in allocating voluntary redress payments in the context of enforcement investigations.

  • Published: 11th Sep 2015
  • Agendas, minutes and presentations
  • 2 Associated documents
Ofgem held its annual Enforcement Conference on 24th June 2015. The event presented learning points from past enforcement cases, Ofgem’s annual Enforcement Priorities, and held roundtable discussions to garner attendees’ views on a number of topics.

  • Published: 26th Jun 2015
  • Investigations, Reports and plans
  • 1 Associated documents
The EDP was established in June 2014 to exercise the Authority’s statutory functions in enforcement decisions. The EDP reports annually on its activity during the previous year and we have now published the EDP’s first annual report for 2014/15.

  • Published: 17th Jun 2015
  • Investigations, Open letters and correspondence
  • 1 Associated documents
This open letter details out our strategic enforcement priorities for 2015-16.

  • Published: 16th Jun 2015
  • Agendas, minutes and presentations
  • 2 Associated documents
Ofgem hosted the Enforcement Conference on 5 December 2014. The event presented learning points from past enforcement cases, a showcase of the newly implemented Enforcement Review, and held roundtable discussions to garner attendees’ views on a number of...

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