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: 7th Feb 2014
  • Decisions
  • 1 Associated documents
Under the Carbon Emissions Reduction Target (CERT) Order 2008 (‘the CERT Order’) (as amended) SSE had a total obligation and a number of sub-obligations to reduce carbon emissions by promoting energy efficiency measures in domestic households in Great...

  • Published: 19th Nov 2013
  • Decisions
  • 1 Associated documents
This decision sets out our response to the key issues raised by our stakeholders during our consultation on Ofgem’s enforcement activities.

  • Published: 8th Nov 2013
  • Decisions
  • 3 Associated documents
We published consultation papers in June on proposed penalties and procedural guidelines for REMIT investigations and are grateful for the responses we received. Most respondents agreed that our approach to enforcement should, as far as possible, be...

  • Published: 1st Oct 2013
  • Decisions
  • 1 Associated documents
See a summary of responses to our consultation on changes to our guidance on impact assessments.

  • Published: 27th Sep 2013
  • Closed: 25th Oct 2013
  • Consultations and responses
  • 1 Associated documents
Ofgem’s first Enforcement Conference took place on 26 September 2013 at the Park Plaza Hotel, Victoria.

  • Published: 8th Aug 2013
  • Guidance
  • 0 Associated documents
We are currently undertaking a review of our approach to enforcement which will be completed in three phases. The first phase was completed on 28 June 2012 with the publication of our updated Enforcement Guidelines on Complaints and Investigations, to...

  • Published: 9th Jul 2013
  • Other
  • 1 Associated documents
This is our document setting out GEMA’s proposal to impose a financial penalty

  • Published: 13th Jun 2013
  • Open letters and correspondence
  • 1 Associated documents
Ofgem welcomes today’s announcement by British Gas that it has made a £10 million payment which will directly benefit energy consumers facing financial hardship.

  • Published: 6th Jun 2013
  • Closed: 29th Aug 2013
  • Consultations and responses, Decisions
  • 15 Associated documents
The EU ‘REMIT’ Regulation prohibits insider trading and market manipulation in wholesale energy markets and imposes obligations on market participants and other organisations involved with wholesale energy markets.

  • Published: 29th May 2013
  • Other
  • 1 Associated documents
Letter to all with an interest in CESP setting out the administrative arrangements that Ofgem will use to process mitigation actions delivered beyond 30 April 2013 by companies which failed to comply with obligations under CESP

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