Ofgem wants ‘better protection for businesses’

adminBusiness Electricity, Business Gas, Utilities Market Regulation, Wholesale Utilities Markets

In a press release on Monday, Ofgem proposed new measures designed to shake up the business energy market, and encourage energy suppliers and brokers to provide a better service.

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Ofgem are continuing their review of the business energy markets this week, proposing major changes for the business utilities industry.

The new measures include improved standards of conduct for suppliers, more protection for small businesses, more protection for businesses using a broker, and investigating supplier conduct during the switching process.

Utilities Savings has worked to a strict Code of Practice since October 2009. We fully welcome this news, having taken part in the consultation by Ofgem earlier this year.

UIA Boatmark

We are particularly pleased with the intention to create a new accreditation scheme for business TPIs (Third-party Intermediaries). Utilities Savings is one of around only 30 brokers in the UK accredited by the Utilities Intermediaries Association (UIA).

Currently, there is no way of enforcing standards of conduct for all energy brokers in the UK. The UIA is an independent body designed to set standards and build confidence for those companies that use a business energy broker, but membership is voluntary.

Click on each of the 4 headings below to read more about each element of the reform.

Ofgem market reform in detail:

New code of conduct for suppliers

Putting new standards of conduct into suppliers’ licences so Ofgem has the powers to enforce them if they are breached. These aim to ensure that suppliers and the brokers that represent them are fair, honest and transparent in their dealings with businesses. Also, all sales and marketing to businesses will be required to be accurate, not misleading and written in plain English.

Micro-business conditions extended

Extending existing licence conditions which protect micro businesses to benefit larger small businesses with less than 50 employees and an annual turnover of no more than €10 million. These prescriptive rules require suppliers to provide clear and transparent contract terms and conditions up front and regulate how contracts can be rolled over.

New code of conduct for brokers

Proposing a range of reforms to better protect businesses from unfair sales practices. In addition to the new standards of conduct, which cover marketing and all other dealings with business customers, these include an Ofgem accreditation scheme for Codes of Practice governing energy brokers; and asking government for new powers to take enforcement action directly against brokers for misleading marketing in the business sector. Ofgem currently has no direct powers to take enforcement action against energy brokers that only deal with business customers.

Reviewing suppliers’ compliance with existing licence conditions

Ofgem is currently reviewing whether suppliers are compliant with licence conditions which make sure suppliers cannot unjustly frustrate businesses switching to another energy provider. We are now actively considering enforcement action against some suppliers after our research in March found evidence of a high number of objections by companies that were preventing many businesses from switching.

Ofgem documents:
Ofgem Press Release 21/11/11 | Ofgem Factsheet 110 – Protecting businesses