Compliance and enforcement

We actively monitor supplier compliance with our rules. We have several sources of intelligence to help us do this effectively, including:

• routinely collecting information from energy suppliers, such as information on the level and nature of complaints they receive. We strongly encourage supplier self-reporting;
• working closely with Citizens Advice, Citizens Advice Scotland and the Energy Ombudsman to identify systemic issues and emerging trends;
• conducting targeted consumer research (including surveys) and monitoring wider consumer sentiment on social media; and
• reviewing information from whistleblowers within the industry.

We assess the intelligence we receive and use it to inform our compliance engagement with suppliers.

Wherever possible we try to prevent harm to consumers before it happens. We do this in several ways, including by:

• assigning a dedicated account manager to most suppliers, to provide a clear point of contact between suppliers and the Ofgem retail compliance team;
• engaging with new suppliers to ensure they are aware of their regulatory obligations to customers, and working closely with existing suppliers to get to know their business, including site visits and regular telephone contact;
• publishing resources to explain what we expect from suppliers, including guides to the supply licences;
• publicising ongoing compliance work to confirm when Ofgem is aware of an issue and is working with a supplier to resolve it; and
• publicising the outcomes of completed compliance work. This includes individual compliance Decision Notices and the twice-yearly Retail Compliance and Enforcement Report, which provides a round-up of our compliance activities over the preceding six months.

We publicise compliance activities (where appropriate) in the expectation that suppliers will not only consider the lessons, but will also review and, where necessary, improve their own policies and practices. 

The legal requirements that we can enforce, include:

Enforcing licence conditions

We can impose financial penalties of up to 10% of a licensee’s turnover, make consumer redress orders and issue provisional/final orders, where appropriate, for breaches of relevant conditions and requirements under the Gas Act 1986 and the Electricity Act 1989.

Enforcing competition law

We can impose directions and penalties (e.g. a financial penalty on the infringing party of up to 10% of a company’s applicable turnover) for breaches of:

• the prohibitions on anti-competitive agreements and abusing positions of dominance in the Competition Act 1998 
• Articles 101 and 102 of the Treaty on the Functioning of the European Union.

Enforcing consumer protection law

We can apply to the courts for an order to stop breaches of certain consumer legislation, including under the:

• Enterprise Act 2002
• Consumer Rights Act 2015 
• Business Protection from Misleading Marketing Regulations 2008.

For further information, please see section 2 of our Enforcement Guidelines.

Market investigation references

We have powers to carry out market reviews of activities connected with the generation, transmission and supply of electricity and the transportation and supply of gas. Find out more at why and how we investigate.

We may also make a market investigation reference to the Competition and Markets Authority where we have reasonable grounds to suspect that any feature or combination of features prevents, restricts or distorts competition in the gas and electricity markets.

REMIT and wholesale market integrity

REMIT is Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency. It is a mechanism for reporting and preventing wholesale energy market abuse, in force since 28 December 2011.

For detailed information about REMIT, including how to register as a participant, please go to REMIT and wholesale market integrity. 

The Gas and Electricity Markets Authority (our governing body) is given powers by statute to make decisions about enforcement action. However, they can delegate decisions about breaches or infringements, the use of enforcement powers, and the imposition of penalties or consumer redress payments.

The Authority’s decision-making bodies include the Enforcement Oversight Board, Settlement Committees and the Enforcement Decision Panel. 

Enforcement Decision Panel

Where enforcement cases are contested, the Authority may delegate decisions to the Enforcement Decision Panel (EDP). These decisions can involve imposing a significant financial penalty on energy companies when they break regulatory rules.

The EDP was created to allow cases to be decided by dedicated specialists, with an easily visible separation between the investigation and decision-making functions. Members of the panel play a crucial role in continuing to deliver our central duty to protect consumers, facilitate competition and ensure the integrity of the wholesale energy market.

How does the EDP work?

Members of the EDP are appointed by the panel Chair to case decision panels or settlement committees, to hear and take decisions in individual cases. Once appointed to a panel or committee, the role involves delivering our Enforcement Vision by taking decisions on behalf of our governing body as to whether there has been a breach of obligation, competition laws, or REMIT regulations, and whether a penalty or redress package should be imposed and if so what level of penalty or redress.

The EDP’s decisions are independent from the investigating team and our governing body cannot change or over-rule EDP decisions.

Powers in criminal cases

The Authority has delegated power to the Chair of the EDP or another legally qualified member of the EDP, to take decisions on whether to proceed with criminal prosecutions. This took effect on 29 February 2016 and full details can be found in the Prosecution Policy Statement.

Terms of Reference and Annual Reports

We have published both the EDP's terms of reference and the terms of reference for Settlement Committees in the Committees of the Authority document on our website.

You can read details of EDP enforcement activity, and information about its members, in our EDP annual reports. These are available in the in our cross-sector reports and updates section.

The EDP has been authorised to take enforcement decisions on behalf of the Civil Aviation Authority for any Competition Act cases. This came into force on 22 April 2016. The Authority is indemnified in relation to any decisions taken by the EDP on behalf of the CAA.

Settlement committees

A Settlement Committee may be constituted for any sectoral or Competition Act case which is considered suitable for settling a case. A Settlement Committee generally consists of two members of the EDP and one Ofgem Director. They will have regard to the Authority’s penalties and redress policy statement. 

Settlements usually result in consumer redress payments being made to individuals affected by a breach and/or to a suitable charitable organisation. Any redress payments made to a charity or trust are allocated by an independent third party.

For information on how settlement and contested cases are managed, see our Enforcement Guidelines.