Managing the impact of COVID-19 on the energy market – relaxing network charge payment terms

Correspondence and other

Publication date

Industry sector

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

This open letter sets out how Ofgem expects network companies to support energy suppliers and shippers who are facing cash flow challenges as a result of the unprecedented public health emergency triggered by COVID-19. 

Our overarching aims during this crisis are to ensure that energy consumers are offered the support and service they need, to minimise disruption for consumers and other market participants that could arise should companies exit the energy market in a disorderly way over the next few months, and to mitigate the risk to consumers of a material decline in competition arising from the potential exit of otherwise efficient suppliers.

These are difficult times for energy consumers, with many households and businesses facing financial challenges. Suppliers have agreed with government to provide relief to customers experiencing hardship as a result of COVID-19, and we have asked suppliers to consider what support they can extend to their non-domestic customers. 

Network companies, through the Energy Networks Association (ENA), have developed schemes to provide relief to cash flow-constrained suppliers and shippers. This open letter sets out the parameters of these schemes, and Ofgem’s expectations of any suppliers who opt to defer their network charges.

We have also received enquiries from suppliers on whether we will adjust the default tariff cap to reflect additional costs that suppliers may incur due to the impacts of COVID-19. This open letter provides an update on our approach to COVID-19 with regard to the price cap. Customers can still be confident the price reflects the true costs of supplying energy.