Greater protection for businesses under new Ofgem proposals

Source: 12/7/2023, Location: Europe

Proposals to expand protections to drive excellent customer service for businesses have been set out today (Thursday 7 December 2023) by Ofgem.

The energy regulator has launched a statutory consultation on proposals to ensure businesses get the highest standards of service and provide more clarity on the costs being paid to third party energy brokers.

Business groups have repeatedly told Ofgem that they need more support with energy issues and today’s announcement follows extensive engagement with energy suppliers, companies and other groups, who highlighted a number of issues.

Tim Jarvis, Director of Markets for Ofgem, said:
“Businesses are no different from any energy customer and should be able to expect excellent service and fair prices. However, we have heard from too many businesses, particularly small and medium sized ones, that this isn’t always the case.

“Today’s proposals will ensure better deals, better protection and more clarity for businesses - so they have the best chance of thriving at this difficult time.”

Today’s consultation launch kick starts the process to bring in a new set of rules for suppliers to make sure they improve customer service and clearly set out costs for customers, including costs customers pay for third party services, like energy brokers. All customers should expect fair treatment from their suppliers and these proposals would tighten the rules to make sure that happens.

In addition, Ofgem is also seeking views on expanding suppliers’ Complaint Handling rules and requiring signposting to support services. These changes support the proposal set out by the Government to give Small Businesses with fewer than 50 employees the ability to take complaints about energy suppliers that they cannot resolve with them to the Energy Ombudsman. Currently only ‘Micro Businesses’ can take disputes to the Energy Ombudsman.

The consultation includes proposals to:
Expand existing rules on Standards of Conduct to all businesses. Currently, these rules only apply to interactions with microbusinesses. This change will make clear that suppliers should put customers first and would also allow Ofgem to take action if an energy supplier does not behave well towards any customer, regardless of business size.

Expand rules around transparency on what consumers are paying for Third Party services to all business consumers. Many non-domestic consumers use Third Party Intermediaries (TPIs) such as energy brokers to help find the best deal for the business – and many good energy brokers often play a valuable and vital role in helping businesses navigate the energy market with confidence.

However, the regulator believes all customers should be clear on the costs of these services and the costs of their supply contract, so Ofgem is proposing to extend the requirement for energy companies to separately show the costs of using a broker to all businesses, not just micro-businesses.

Earlier this year, Ofgem presented findings from the non-domestic review and presented a wide range of possible solutions. After carefully considering stakeholders views, together with extra data from suppliers and customer research, Ofgem is now able to formally propose actual licence changes, as a regulatory requirement.

To get involved and have your say, please email by Wednesday 31 January 2024.

See full details in the document Non-domestic market review: findings and statutory consultation.
A Micro Business Consumer uses less than 100,000 kWh of electricity a year; uses less than 293,000 kWh of gas a year; or has fewer than 10 employees (or their full-time equivalent) and an annual turnover total not exceeding 2 million Euros (equivalent to £1.714m according to Xe on 6 December 2023).
Today’s announcement supports new Government proposals to expand support from the Energy Ombudsman to cover small businesses with fewer than 50 employees.
To help give both suppliers and consumers that clarity, Ofgem is today announcing a new statutory consultation on specific proposed changes to certain non-domestic licence conditions. The consultation will open on 7 December 2023 and close on 31 January 2024.??
The consultation follows a Call for Input on the Non-Domestic Gas and Electricity Market and a Non-Domestic Market Review Findings and Policy Consultation on the issue that both took place earlier in 2023.??
Alongside the statutory consultation on 7 December, we are also today publishing an interim report of findings from research conducted with non-domestic energy consumers. This research was commissioned by Ofgem and DESNZ to build on existing evidence about non-domestic consumers’ experiences of the energy market.

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