Here you can find out about our powers to make decisions to conduct investigations or take enforcement action, and how we do it.
What is enforcement action?
Enforcement action includes:
- issuing directions or orders to bring an end to a breach, or remedy a harm that was caused
- imposing financial penalties and accepting commitments or undertakings relating to future conduct or arrangements.
What action can we enforce?
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.
Who makes our enforcement decisions?
Gas and Electricity Markets Authority (or ‘GEMA’)
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.
In cases where the penalty amount is below £100,000 or the issues raised are unlikely to attract significant industry or media interest, or are otherwise uncontentious, the case may be handled by a senior Ofgem employee.
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.
To find out how the EDP works, please read its terms of reference.
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 partner or senior partner. 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.