Your chance to input into our Forward Work Programme

Blog

Dermot Nolan

Publication date

Industry sector

  • Distribution Network
  • Generation and Wholesale Market
  • Supply and Retail Market
  • Transmission Network

As we move towards a smarter, more flexible energy system, rapid changes in regulation and rules governing the market has become the norm. The scale of change the energy market is going through for example with smart meters and rapid growth of renewables is unprecedented.

Now more than ever, Ofgem must work quickly to make sure regulation keeps pace with the change. Today we are setting out key work areas that we will focus on in our Forward Work Programme (FWP) for the next next financial year. 

We need the commitment of energy companies and other stakeholders to help us deliver a better future for consumers. That’s why we are calling on you to read the plans and tell us what you think. We are also publishing our regulatory stances - five themes which will guide development of our policies to deliver the best outcomes for consumers. We will continue to speed up our decision making and be alive to new ideas, thinking more about their opportunities rather than their difficulties.

Over the next year we will take big steps towards delivering a better energy market for consumers. We will start bringing in a set of reforms to improve competition including a price cap to protect pre-payment meter customers from April, which will save them up to £75 a year. This results from the Competition and Markets Authority’s remedies for the energy market.

We are heading towards a smarter market which should revolutionise energy, giving consumers much more control. We want them to get the most out of smart meters. So in August we will publish our plan for bringing in faster, hassle free switching, before making a decision on it at the end of 2017.

However, the key to a better energy market is trust. Ofgem will play its part by clearly explaining how the market works and building more confidence in the switching process. But suppliers must also step up to the plate and work with us, and consumer groups to create a market which works for everybody, not just those who frequently switch to get the best deals.

To help suppliers we are moving to principles-based regulation from next year which will ensure that they understand and deliver what is right, fair and of value for their customers. 

In 2017 we will amend supply licences to include the broad principles. One of these is the requirement that they have special consideration for vulnerable customers. 

Moving to principles-based regulation doesn’t mean we will be letting suppliers off the hook if they break the rules. In fact it will make it easier to take action against them if we need to. 

We want to support innovation and principles based regulation should make it easier for companies to be innovative. In the past the density of the supply licence may have put off new entrants. We are encouraging them to talk to us about their ideas through our new Innovation Link.

Away from the retail market, other areas we will focus on in the next year include preparing for the next RIIO (Revenue=Incentives+ Innovation+Outputs) price controls for gas, and electricity transmission, and gas distribution (from 2021). We are monitoring network company performance very closely and we will talk to stakeholders asking for evidence of what is working well and what should be improved for the next price control. This will ensure customers continue to benefit from high reliability standards, good customer service and value for money. 

To expand and promote competition within the UK’s energy network, we are working to introduce tendering for high value onshore transmission upgrades from next year. This will help drive down costs for consumers. In Spring we will publish next steps on making the energy system more flexible, following the call for evidence. This will ensure that consumers get the most out of smart meters and smart grids.

This blog highlights the main areas that we will be working on. However there are many others. I encourage anyone who wants to help shape our work to respond to our consultation by 15 February 2017.