What we regulate

We regulate the energy markets in Great Britain (England, Scotland and Wales).

Regulating energy markets means that we regulate the companies that make, move and sell energy. We also act to protect the environment and consumers in homes and non-domestic properties.

We regulate energy markets by:

issuing licences and setting licence conditions
providing guidance for energy companies
managing changes to industry codes
making sure that energy companies are following the rules, and taking action if not

For information on licensing, compliance and enforcement, see Energy regulation.

Energy supply

Energy suppliers sell gas and electricity directly to consumers. When consumers pay their energy bill, they are paying an energy supplier.

We set rules for domestic and non-domestic energy suppliers to make sure they provide accurate and timely bills, and good customer service.

We also make sure they act in the best interest of consumers, especially those who need extra help.

Metering

To help consumers know how much energy they use, we set rules suppliers must follow to install and maintain electricity and gas meters. This includes:

These rules help make sure bills are accurate and customers can monitor their usage.

We also license and regulate the Data Communications Company (DCC), which manages the infrastructure connecting smart meters with energy suppliers.

Consumer protection

To make sure all consumers are treated fairly, we:

listen to consumers to understand their situations and lived experiences
make energy suppliers identify consumers who need extra help
set incentives to encourage inclusive innovation

Security of supply

Security of supply means:

there's enough energy available to meet demand, even at peak times
our energy supply comes from a range of sources, making it more resilient and reliable
consumers can use energy with minimal interruptions

The companies that own and operate our electricity and gas networks must manage security of supply as part of their licence. They must also comply with relevant regulations and industry codes, including the Security and Quality of Supply Standard (SQSS), energy network price controls and the energy price cap.

Energy pricing rules

We set the energy price cap to make sure the price consumers pay for a single unit of energy and standing charge is fair. It only applies to households that are on standard variable tariffs, known as 'default tariffs'.

Suppliers add a daily standing charge to all gas and electricity bills to cover the cost of running the energy system.

Energy network price controls

We set price controls to make sure energy network companies treat customers fairly, invest in improving their service and support the move to low-carbon energy.

The RIIO framework

Energy network price controls are known as RIIO (Revenue = Incentives + Innovation + Outputs), where:

Revenue is how much money an energy network company can make
Incentives encourage energy network companies to find new ways to improve their service
Innovation means energy network companies find new ways to provide a safe, reliable and sustainable network while offering value for money
Outputs include safety, preserving the environment, customer satisfaction, social obligations, network connections, reliability, and availability

Electricity generation

Electricity generators burn fuels like gas or use nuclear or renewable sources like wind or sunlight to make the electricity we use.

Our role in electricity generation

We license larger electricity generators. We also set rules on:

electricity storage, for generators that store excess electricity for later use
wholesale markets, which let generators sell electricity to suppliers through a competitive process that ensures fairness and efficiency
small scale electricity generation, for homes and businesses that generate their own electricity from renewable sources like solar panels and wind turbines

Electricity transmission

Transmission networks move high-voltage electricity over long distances, from where it’s made to where it’s used, through pylons and power lines.

Read more about electricity transmission.

Our role in electricity transmission

We license the National Energy System Operator (NESO) to operate the electricity network. It is responsible for:  

making sure there is enough supply to meet consumer demand
designing an energy system that meets future electricity infrastructure needs
planning and coordinating the design of electricity networks

We license transmission network operators, who are responsible for refurbishing, upgrading or building new essential infrastructure.

To learn more about the transmission network operator in your area, see Energy networks explained – Energy Network Association.

Offshore electricity transmission

Offshore electricity transmission connects windfarms at sea to the onshore transmission network.

We run a competitive tender process to own offshore transmission assets, including cables, substations and connection points. We then license offshore electricity transmission owners (OFTOs) to operate their assets.

We also help to coordinate the development of the future offshore network.

Electricity interconnectors

Interconnectors are large cables under the sea and on land that link our national grid to those in other countries.

We need interconnectors to let us quickly import and export around 10% of our electricity. Trading electricity like this helps us to maintain a clean, resilient and efficient energy system.

Incentives for owning and operating electricity interconnectors

We set a minimum and a maximum for how much a company can earn using a financial system called cap and floor.

The most a company can earn from each interconnector is the cap. This lets consumers benefit from lower transmission charges when revenues are high.

We also guarantee a minimum amount that companies will earn. This is the floor. This provides an incentive for them to invest.

Electricity distribution

Electricity distribution is the last stage in moving electricity from where it’s made to where it’s used.

Electricity distribution network operators (DNOs) connect homes and businesses using:

low-voltage and medium-voltage power lines
substations and transformers that reduce voltage
equipment to monitor and control power flow

Our role in electricity distribution

We issue distribution licences and monitor how companies work to make sure they meet the licence conditions.

The licence conditions are designed to make the electricity distribution network efficient, safe and beneficial to consumers.

We work together with the NESO and DNOs.

DNOs:

make sure the network is reliable
limit how much electricity is lost during distribution
coordinate with other network operators in distribution and transmission
enable connections for new generators like solar farms
enable connections for new uses like electric vehicle charging points

To find your DNO, see Energy networks explained – Energy Network Association.

Gas shipping

Gas shippers buy gas from producers, arrange to move it through the National Transmission System (NTS), then sell it to suppliers.

Our role in gas shipping

We issue licences for gas shipping.

The licence conditions ensure that gas shippers:

balance daily gas inputs and outputs on the network
arrange to move gas safely
comply with network codes and regulations
work with suppliers to provide uninterrupted gas supply to customers

Gas transmission 

The National Transmission System (NTS) is the network of pipes and pressure stations used to safely move gas at high pressure from its source over long distances.

We license National Gas to operate the NTS. It is responsible for:  

residual balancing of the gas network
maintaining the security, safety and stability of gas supply 
maintaining and upgrading the NTS

Find out more about how we work with National Gas.

Gas interconnectors

Gas interconnectors are large pipelines that transport gas between countries, ensuring our gas network can meet demand.

Current gas interconnectors

There are 3 gas interconnectors that connect to our National Transmission System:

Interconnector UK (IUK) connects Great Britain to Belgium, with gas flowing in both directions
Balgzand to Bacton Line (BBL) links Great Britain to the Netherlands, with gas flowing in both directions
Moffat interconnector works in a single direction, transporting gas to the Republic of Ireland

Transport System Operators

The commercial companies responsible for gas interconnectors in Great Britain are called Transport System Operators (TSO). TSOs run the pipeline and manage its capacity.

How we regulate gas interconnectors

We issue licences to TSOs. We also monitor them to ensure that they meet their licence conditions.

We set rules for how gas shippers and transporters can access interconnectors to buy and sell gas, and how much they pay.

Gas distribution 

Gas distribution network operators (DNOs) safely move gas from the National Transmission System to homes and businesses.

We license gas DNOs, who are responsible for:

operating, maintaining and upgrading their networks
security, safety and stability of the gas supply 
responding to gas emergencies and leaks
connecting new properties to their network