Ofgem's powers

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.

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 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.

 

Publications and updates

  • Published: 24th Aug 2017
  • Guidance
  • 1 Associated documents
We have appointed the Energy Saving Trust (EST) as the independent Service Provider to manage and allocate voluntary redress funds.

  • Published: 14th Apr 2016
  • Guidance
  • 1 Associated documents
This guidance explains how Ofgem will exercise its powers to approve and enforce voluntary redress schemes for infringements of competition law.

  • Published: 14th Dec 2015
  • Guidance
  • 1 Associated documents
An open letter setting out the process and principles involved in allocating voluntary redress payments in the context of enforcement investigations.

  • Published: 6th Aug 2014
  • Open letters and correspondence
  • 1 Associated documents
This Open Letter addresses this issue, and how Ofgem will consider the above factors when considering any enforcement action.

  • Published: 28th Mar 2014
  • Open letters and correspondence
  • 1 Associated documents
This open letter gives our position on regulatory compliance.

  • Published: 27th Mar 2014
  • Investigations, Open letters and correspondence
  • 1 Associated documents
This open letter sets out the Authority's position on future financial penalties.

  • Published: 28th Mar 2013
  • Closed: 23rd May 2013
  • Consultations and responses
  • 18 Associated documents
In March 2013, we consulted on proposed changes to Ofgem’s enforcement policies and procedures.