Ofgem Procurement of a service provider for the allocation of voluntary redress payments

Publication date
17th February 2017
Information type
Policy area

Ofgem has today published a contract notice for the procurement of an expert independent Service Provider to manage and allocate voluntary redress funds. Voluntary redress funds are paid to charitable bodies by energy companies in lieu of a penalty following wrong-doing or a failure which impacts consumers negatively.

This publication follows our decision to engage an expert third party organisation, following a consultation on the proposal in summer 2016.

The procurement of the organisation will be conducted in two stages:

  1. Parties interested in providing this service must complete and submit the Selection Questionnaire (published today) by 15 March 2017.
  2. Ofgem will invite the highest scoring parties from the Selection Questionnaire stage to submit a full tender submission. Following a thorough evaluation of these responses Ofgem will award the contract to one of these parties.

The expert service provider will be responsible for:

  • Financial management of voluntary redress monies, including receiving the funding from energy companies and awarding grants to charitable recipients;
  • Identifying potential charitable recipients, which could include local authorities acting in partnership with a charity, to be allocated redress funding whose projects would achieve the Authority’s objectives;
  • Using knowledge of the British energy sector and the needs of energy consumers - including the needs of vulnerable consumers and those of future consumers - to inform decisions on the allocation of funding;
  • Monitoring the projects and evaluating the use of the funds and taking action to ensure that the projects are delivering real benefits to consumers; and
  • Providing Ofgem with regular reports on the performance against the objectives.

The allocation decisions of the Service Provider are to be made so that the following principles are met:

  • a proportion of the funding is used to support projects that deliver benefits to the types of consumers that were negatively impacted by the breach(es) that have occurred;
  • a proportion supports projects in line with Ofgem policy priorities, such as our current wish to support energy consumers in vulnerable circumstances; and
  • a smaller share of the redress money is used to fund charitable projects that implement innovative products or services that are market ready but are not yet accessible to energy consumers and which have realistic prospects of delivering direct benefits to consumers.

The Authority may provide further guidance on the allocation of the funds, which may be updated.

If you are interested in applying to provide this service, see the contract notice.

As noted in our November 2016 decision, we will aim to announce our chosen supplier in summer 2017.