Ofgem: How is the energy regulator looking out for you?

Ofgem

What’s in this guide?

Introduction

Buying energy can feel like swimming in a pool of sharks. But luckily you have a lifeguard on duty, Ofgem.

Ofgem monitors and enforces rules in the electricity and gas markets. Its full name is the Office of Gas and Electricity Markets, and it is an official government regulatory body.

Thrilling stuff, we know.

But before you nod off – Ofgem can help you in many different ways. They provide the most independent data on energy suppliers (which is why you will find lots of Ofgem statistics on this website). They can also help you if you need to complain about your energy supplier.

Here is what you need to know to get the most out of this organisation:

  • What is Ofgem?
  • What powers does Ofgem have?
  • How does Ofgem rate your supplier?
  • State of the energy market report 2017
  • How do I make a complaint about my energy provider?

What is Ofgem?

Before 1996 you didn’t have any choice who you bought your electricity or gas from, as British Gas and the Central Electricity Generating Board (CEGB) were the only significant providers in the UK.

Even after these companies were sold by the government, there still wasn’t much choice as it took time for competition to develop.

Ofgem was set up in 2000 when the electricity and gas regulators merged.

To ensure that the large suppliers didn’t overcharge consumers, Ofgem controlled energy market prices during these early years of privatisation.

By 2002 Ofgem determined that competition between suppliers was stiff enough and price controls were dropped.

Energy companies were free to set their tariffs, and customers could switch if they could find a better rate.

What powers does Ofgem have?

Ofgem’s goal is to protect the interests of British energy consumers. A large part of this is making sure that you get good value for money.

Investigating overcharging

Today, Ofgem protects you by investigating and fining companies that break the law. In 2018 Ofgem found British Gas was charging customers higher tariffs and unnecessary exit fees when they elected to change providers.

This investigation led to British Gas repaying £747k to customers that were overcharged. Since 2010 Ofgem has issued £260m in fines and customer repayments, with most of the money going straight back to wronged customers in recent years.

Protecting vulnerable customers

It is also part of Ofgem’s role to protect vulnerable customers, including those that are older, disabled, ill or on a low income.

Energy is an essential part of modern life, so Ofgem works to ensure vulnerable consumers have steady access to electricity at reasonable prices.

One example of this is a cap on the per-unit price that energy suppliers can charge customers using a pre-paid meter. Many low-income customers need to pre-pay for their energy when they do not have a bank account to use for direct debits.

Ofgem works to ensure that these vulnerable customers are not charged low rates, and where possible, can move to cheaper contracted rates.

Promoting sustainable energy

Ofgem manages a range of government programs to promote renewable energy use and energy conservation, here are a couple of the largest ones:

  • Energy Company Obligation (ECO) – Requires large suppliers to fund the installation of energy saving measures in homes. Through this scheme, you could have insulation installed to reduce your energy bills. Some funds are specifically directed to vulnerable households.
  • Renewable Heat Incentive (RHI)– Both individuals and businesses can access rebates from the government for installing renewable energy sources in their homes. Biomass boilers, air or ground source heat pumps and solar panels can all be fixed, and payments last for the first seven years of use. Just make sure you meet the requirements before you commit to installation.
  • Warm Home Discount (WHD) – Lower income customers are supported through a £140 annual discount if they are getting their energy from a large supplier. You are eligible if you get the Pension Credit Guarantee Credit or meet your supplier’s criteria for low-income customers.

Data

So the team at Ofgem are pretty busy. But their most useful contribution might be all the data they give you access to. Ofgem collects and publishes survey data on the significant supplier’s customer service.

Suppliers are also required to disclose how many customer complaints they receive and their tariffs for comparison.

Here are Ofgem’s 2017 statistics for satisfaction with the major providers. Overall the big six are all in the same league, with less than 40% of customers willing to recommend them heartily.

However, you will see that British Gas and SSE do slightly better than the others as electricity providers, while E.ON is the clear favourite in the Gas market.

Regarding complaints, the big six receive more than their small and medium sizes competitors – not too much of a surprise. But overall, a 2% complaint rate isn’t all that bad.

When we split out just the big six, we can see that there historically hasn’t been much different.

However, in the last year, Scottish Powers complaint rate has shot up, while British Gas has improved considerably.

So these facts and figures are all very well, but how do you know if you are getting a good deal?  Luckily Ofgem has the advice to help you here too:

State of the energy market report 2017

Every year Ofgem writes a giant report on the competition and affordability of the energy market. While not the most fun bedtime read, it can offer some clues to getting the best energy deal.

The good news is that the UK now gets 25% of its energy from renewable sources and on average households use 20% less energy than ten years ago.

Ofgem could also see which groups were winning and losing in the energy market. Here is their advice:

  • As a consumer, you can be better off to the tune of £300 per year if you shop around for an excellent fixed-term rate, rather than just staying on a default variable tariff. 58% of people never switch suppliers and pay higher prices as a result.
  • Small firms end up paying through the nose for their energy, while larger companies can negotiate better rates and are more willing to shop around. So if you are buying power for your business, it is worth comparing suppliers and pushing them for discounts.

Making a complaint about your energy provider

Hopefully, you are not here because something has gone wrong with your energy supply. However, if you are having trouble resolving an issue, Ofgem has instructions for what to do:

  • Talk to your provider – Your first port of call, of course, needs to be your provider. They are motivated to get your problem solved quickly, as they need to report on the number of complaints they can answer by the next working day. You can call them on the number on your bill. Citizens Advice is available to help you if you want some advice on how to express your complaint.
  • Give your provider up to 8 weeks to resolve the problem – Before you can escalate your complaint, you need to work with your provider for eight weeks to sort out the issue. They may want to visit your home to read your meter. It is helpful if you record who you speak to and what your provider does to try to fix the problem. But if your issue still isn’t resolved, you can:
  • Complain to the Energy Ombudsman – your provider will have sent you a “deadlock” letter after eight weeks without issue resolution. This will include instructions on how you can contact the Energy Ombudsman if you wish to. The Energy Ombudsman can decide what should be done to solve the problem; it could be a fix, an apology or financial reparations. The ombudsman service is free to you, and your provider is bound to follow the ombudsman’s ruling.

Here’s hoping that any issue you have doesn’t get this far, but it’s good to know there is an impartial authority there to help if things get messy.

Final Summary

So all up, we can be pretty glad to have Ofgem. They are keeping those energy supplier sharks in line and digging up the dirt so we can make the best decisions on who to buy from.

So now that Ofgem has told you that you can save £300 a year by shopping around and getting an excellent fixed-term rate, its time to get comparing.

Take a look at the EnergySeek guides to find out more about your energy, or see reviews of the top 7 energy switching sites to compare gas & electricity.