According to the Department for Energy Security and Net Zero, Ofgem will be transformed to strengthen protection for consumers, allowing it to enforce consumer law directly and bypass lengthy court processes. The regulator will also have powers to ban bonuses of energy company executives if they breach licence conditions in a way that causes significant harm to consumers. Energy Secretary Ed Miliband stated that the government is fighting people’s corner with steps to strengthen protections, including measures to ban energy company executives if they break the rules.
The reforms involve removing Ofgem's responsibility for oversight of home upgrade schemes, with that role to be performed by the Warm Homes Agency within government. It is unclear how the Warm Homes Agency's oversight will differ from Ofgem's previous role or what specific criteria define 'significant harm to consumers' that would trigger bonus bans. These reforms are the first major update to Ofgem's scope since its founding in 2000, as the energy market has grown more complex with a wider range of products and services and growing numbers of customers in poorly regulated areas.
Ofgem previously never had powers to hold executives individually accountable. Minister for energy consumers Martin McCluskey said that every household must be given a fair deal, with the government transforming the regulator to give families stronger protections and hold energy executives to account. The timing for implementation of these reforms has not been specified.
Interim Ofgem chief executive Tim Jarvis noted that the energy system is going through big changes, and the regulator needs to keep pace with reforms to protect consumers in evolving markets. In the current energy market, heating oil customers have seen prices spike during the conflict in the Middle East, highlighting ongoing challenges.