Decisions about enforcement action are taken by the Gas and Electricity Markets Authority (our governing body).
However, authority is delegated to the members of Ofgem’s Executive that allows them to open cases and to discontinue cases where there is no case to answer.
In addition, the Authority will normally delegate its decision making powers to one of our Managing Directors in relation to cases where it is likely that a low penalty will be appropriate, or that no penalty will be imposed. Such cases may be referred back to the Authority for a decision on policy grounds.
Where enforcement cases are contested, the Authority may delegate decisions to our newly-created body, the Enforcement Decision Panel (EDP). These decisions can involve imposing a significant financial penalty on energy companies when they break regulatory rules. Members of the EDP are also involved in Settlement Committees, together with a member of Ofgem’s Executive.
The Authority's powers are provided for under the Gas Act 1986, the Electricity Act 1989, the Utilities Act 2000, the Competition Act 1998, the Enterprise Act 2002, the Business Protection from Misleading Marketing Regulations 2008 and the Unfair Terms in Consumer Contracts Regulations 1999.
Enforcing licence conditions
Any company wanting to supply gas or electricity, run a gas or electricity network or generate electricity must either be exempt from the requirement to hold a licence for these activities or be licensed by us, under our powers in the Gas and Electricity Acts.
We monitor companies to ensure they abide by their licence conditions. If they are found in breach of these conditions the Enforcement Committee of the Authority can
- issue an enforcement order to ensure companies comply with their licence conditions
- impose financial penalties of up to 10 per cent of the licensee’s turnover.
Enforcing competition law
Effective competition helps keep downward pressure on costs, to the benefit of customers. Competition also helps promote more diversity in gas and electricity supplies and a greater choice of tariffs and services for customers.
Our priority is to help markets operate transparently and effectively, remove barriers which may prevent this and, when necessary, use our powers to tackle anti-competitive behaviour or practices.
If a company or business entity is found to have infringed UK or EU competition law, the Enforcement Committee of the Authority can:
- accept binding commitments or issue directions to stop the behaviour
- impose financial penalties of up to 10 per cent of the company’s world-wide turnover.
Enforcing consumer protection law
We monitor companies to ensure that they comply with European and UK consumer protection law. Where a breach has occurred, we can apply to court for an enforcement order requiring a trader to comply. We can also accept undertakings from the trader that the trader will not continue or repeat the conduct.
Market investigation references
We carry out market reviews of activities connected with the generation, transmission and supply of electricity and the transportation and supply of gas.
We may also make a market investigation reference to the Competition Commission where we have reasonable grounds for suspecting that any feature or combination of features prevents, restricts or distorts competition in the gas and electricity markets.
The investigations main page contains open and closed investigations (including decisions) dating from 2009. Decisions taken on investigations prior to this date are listed in our page Our approach to regulation.
To help suppliers learn from past issues that have resulted in enforcement and compliance action, we are sharing Lessons Learned. Our first publication relates to Lessons Learned on Sales and Marketing.