Our powers and duties

Guidance
Dyddiad cyhoeddi

This description summarises the primary powers and duties of our governing body, the Gas and Electricity Markets Authority (GEMA). The Authority determines Ofgem's strategy, sets policy priorities and makes decisions on a wide range of regulatory matters, including price controls and enforcement. 

This summary is not comprehensive and is not a substitute to reference to the relevant legal instruments (including, but not limited to, those referred to below).

1.1 The Authority's powers and duties are largely provided for in statute, such as the:

  • Gas Act 1986
  • Electricity Act 1989
  • Utilities Act 2000
  • Competition Act 1998
  • Enterprise Act 2002
  • Energy Acts of 2004, 2008, 2010 and 2011
  • measures and Acts arising directly from effective European Community legislation.


1.2 References to the Gas Act and the Electricity Act are to Part 1 of those Acts.[1]  Duties and functions relating to gas are set out in the Gas Act and those relating to electricity are set out in the Electricity Act.  This description must be read accordingly.[2]


1.3 The Authority’s principal objective is to protect the interests of existing and future consumers in relation to gas conveyed through pipes and electricity conveyed by distribution or transmission systems.  The interests of such consumers are their interests taken as a whole, including their interests in the reduction of greenhouse gases in the security of the supply of gas and electricity to them and in the fulfilment by the Authority, when carrying out its functions as the designated regulatory authority for Great Britain, of the objectives set out in Article 40 (a) to (h) of the Gas Directive [3] and Article 36 (a) to (h) of the Electricity Directive.[4]


1.4 The Authority is generally required to carry out its functions in the manner it considers is best calculated to further the principal objective, wherever appropriate by promoting effective competition between persons engaged in, or commercial activities connected with,

  • the shipping, transportation or supply of gas conveyed through pipes
  • the generation, transmission, distribution or supply of electricity
  • the provision or use of electricity interconnectors

1.5 Before deciding to carry out its functions in a particular manner with a view to promoting competition, the Authority will have to consider the extent to which the interests of consumers would be protected by that manner of carrying out those functions and whether there is any other manner (whether or not it would promote competition) in which the Authority could carry out those functions which would better protect those interests.


1.6 In performing these duties, the Authority must have regard to:

  • the need to secure that, so far as it is economical to meet them, all reasonable demands in Great Britain for gas conveyed through pipes are met
  • the need to secure that all reasonable demands for electricity are met
  • the need to secure that licence holders are able to finance the activities which are the subject of obligations on them[5]; and
  • the need to contribute to the achievement of sustainable development.

1.7 In performing these duties, the Authority must have regard to the interests of individuals who are disabled or chronically sick, of pensionable age, with low incomes, or residing in rural areas.[6]


1.8 Subject to the above, the Authority is required to carry out the functions referred to in the manner which it considers is best calculated to:

  • promote efficiency and economy on the part of those licensed[7] under the relevant Act and the efficient use of gas conveyed through pipes and electricity conveyed by distribution systems or transmission systems;
  • protect the public from dangers arising from the conveyance of gas through pipes or the use of gas conveyed through pipes and from the generation, transmission, distribution or supply of electricity; and
  • secure a diverse and viable long-term energy supply, and shall, in carrying out those functions, have regard to the effect on the environment.

1.9 In carrying out these functions the Authority must also have regard to:

  • the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed and any other principles that appear to it to represent the best regulatory practice; and
  • certain statutory guidance on social and environmental matters issued by the Secretary of State.

1.10 The Authority may, in carrying out a function under the Gas Act and the Electricity Act, have regard to any interests of consumers in relation to communications services and electronic communications apparatus or to water or sewerage services (within the meaning of the Water Industry Act 1991), which are affected by the carrying out of that function.


1.11 The Authority must carry out its functions in the manner that it considers is best calculated to implement or ensure compliance with any decision of the Agency or the European Commission under the Third Package[8] and, when carrying out its functions as the designated regulatory authority, consult and cooperate with the Agency and other designated regulatory authorities whenever it thinks fit.


1.12 The Authority has powers under the Competition Act to investigate suspected anti-competitive activity and take action for breaches of the prohibitions in the legislation in respect of the gas and electricity sectors in Great Britain and is a designated National Competition Authority under the EC Modernisation Regulation[9] and therefore part of the European Competition Network.  The Authority also has concurrent powers with the Office of Fair Trading in respect of market investigation references to the Competition Commission.


--------------------------------------------------------------------------------

[1] Entitled “Gas Supply” and “Electricity Supply” respectively.
[2] However, in exercising a function under the Electricity Act the Authority may have regard to the interests of consumers in relation to gas conveyed through pipes and vice versa in the case of it exercising a function under the Gas Act.
[3] Directive 2009/73/EC
[4] Directive 2009/72/EC
[5] Under the Gas Act and the Utilities Act, and the Energy Act 2008 and 2010 in the case of Gas Act functions, or the Electricity Act, the Utilities Act and certain parts of the Energy Acts in the case of Electricity Act functions.
[6] The Authority may have regard to other descriptions of consumers.
[7] Or persons authorised by exemptions to carry on any activity.
[8] The Third Package comprises the Electricity Directive, the Gas Directive, the Electricity Regulation (2009/714/EC), the Gas Regulation (2009/715/EC) and the Agency Regulation (2009/713/EC).
[9] Council Regulation (EC) 1/2003.