Consultation on the preliminary Strategic Direction Statement and governance arrangements for industry codes

Consultation
  • Upcoming
  • Open
  • Closed (awaiting decision)
  • Closed (with decision)
Publication date
Closing date
Industry sector
Distribution Network
Generation and Wholesale Market
Supply and Retail Market
Transmission Network

We are seeking feedback on the preliminary Strategic Direction Statement (SDS) and accompanying governance changes.  

Who should respond 

We want to hear views and feedback from anyone who has an interest in the preliminary Strategic Direction Statement and governance arrangements, as well as people who work in the energy sector and the public. This includes: 

  • code administrators 
  • code parties 
  • central system delivery bodies 
  • consumer groups 

Background

The transitional powers provided by the Energy Act 2023 gives Ofgem new functions to set the direction for the development of designated electricity and gas industry codes, as well as the ability to modify licences and codes. As part of the transition to a new code governance framework we propose to publish a preliminary SDS in 2025 and implement governance changes that will support the transition to the new governance framework. 

Our progress

We consulted on reforming the energy industry codes with the government in July 2019 and then again on the design and delivery of energy code reform in July 2021. These consultations helped to shape the new code governance framework in the Energy Act 2023

We also published a call for input in December 2022 and a consultation on our approach to implementing the reforms in January 2024, including our proposals for developing and delivering the SDS. It also set out our intention to review the existing code objectives and harmonise the code modification prioritisation processes under the existing arrangements. 

In August 2024, we published our policy decisions on the proposals we sought views on and also noted our intention to consult further on detailed implementation proposals in due course. Our policy decisions included a decision to proceed with publishing the first SDS in 2025, notwithstanding that our statutory obligation under the Act does not take effect until industry codes are formally designated by the Secretary of State. 

Our proposals

The SDS addresses all industry codes within the scope of code governance reform and looks up to five-years ahead, with a focus on the next 1-2 years. We propose roles and responsibilities for contributing to and implementing the SDS and explain proposals to progress SDS-related code changes under existing governance. To support delivery of the SDS, policy priorities are grouped based on the timeframe for implementation. We hope that this approach will support code administrators, code panels and parties in progressing SDS-related modifications.  

Alongside this, we are consulting on the introduction of the following governance changes:  

  • a consistent modification prioritisation processes  
  • a licence obligation to co-operate with the code modification process where it supports SDS alignment, at a code manager’s reasonable request. 

Modification Process Workgroup

Alongside our August decision on the implementation of energy code reform we published the first of a two-part report on the output of discussions at our Modification Process Workgroup. We are now publishing the second of this two-part report. Read the second part of the report on the output of discussions at our Modification Process Workgroup. 

Upcoming workshop

We’re hosting an event for industry on Monday, 17 February from 2:00 to 3:30pm. We will provide a high-level overview of the proposed content, structure and scope of the preliminary SDS. Find full details about our event on our registration page.  

Register now 

How to respond

You can tell us your views about how we should implement code governance reform by answering the questions in the consultation document. A response form is provided with the consultation. Send the form by email to industrycodes@ofgem.gov.uk by 28 March 2025.