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New Ofgem rules to offer greater protection for businesses

960 640 Stuart O'Brien

Businesses will get fairer treatment, more support resolving disputes and greater transparency on broker fees under new rules announced by Ofgem, the regulator says.

The changes will apply to the non-domestic energy sector, which includes businesses, public services like sports centres and village halls, utilities, charities and more.

The new rules will make sure energy suppliers improve customer service, open doors to alternative dispute resolution schemes and clearly set out costs for businesses, including fees paid for third party services, like energy brokers.

Under the changes, Ofgem will from 1 July 2024:

  • Expand the Standards of Conduct to apply to all businesses of any size, rather than just Micro Business consumers. This will give Ofgem powers to take action against suppliers that do not treat non-domestic customers fairly.
  • Introduce a new supply licence rule for non-domestic suppliers which requires them to signpost Micro Business consumers to Citizens Advice and Citizens Advice Scotland, who can offer support and advice when they have an issue. This will also apply to Small Business consumers from December 2024, subject to the new definition entering legislation.

Further changes, that Ofgem expects to be in place by the end of the year, include:

  • Expanding the requirement for a contract’s principal terms to clearly display any broker fees from Micro Business consumers to all non-domestic customers. This will apply to contracts signed on and from 1 October 2024 and suppliers must make this information available upon request.

From December 2024, in line with the government’s proposed new Small Business consumer definition entering legislation, Ofgem will also:

  • Update the Complaints Handling Standards to ensure suppliers put in place suitable complaints processes for Small Business consumers and point them to the Energy Ombudsman when a customer does not feel the issue has been resolved.
  • Implement a requirement for suppliers to only work with Third-party Intermediaries (TPIs), often referred to as brokers, that are members of a redress scheme when securing Small Business contracts. This will provide reassurance to business customers that they are able to access dispute resolution schemes and get a fair and suitable outcome.

Tim Jarvis, Ofgem’s Director General for Markets, said: “Too many businesses have experienced issues with some energy suppliers, from difficulty getting the right contracts, unexplained price hikes, and poor customer service.

“We’ve worked hard to understand the breadth of issues and where the powers we have to tackle them can be improved. These new rules will help ensure businesses get the service they deserve.

“We’ll be speaking to businesses of all sizes as these rules come into force throughout this year to make sure they are being followed by suppliers. We’ll also continue to work with government, industry, and consumer groups to see what else can be done to support non-domestic consumers.”

Ofgem’s new rules come as the government confirms plans to expand its definition of Small Businesses, meaning businesses with less than 50 employees and a certain turnover or using a certain amount of energy can take complaints about their energy supplier to the Energy Ombudsman.

Under new Ofgem rules, Small Businesses will also be able to resolve disputes about third parties like energy brokers with redress scheme providers, such as the Energy Ombudsman and the Utilities Intermediaries Association (UIA). This was previously only available for Micro Business consumers so the change will give more businesses access to independent support with complaints.

The changes being brought in by Ofgem to help businesses result from concerns shared last year about problems including poor customer service and complaint handling from those in the non-domestic energy market. This prompted a joint deep dive to learn more about these issues with the Department for Energy Security and Net Zero (DESNZ), the full results of which have now been published.

More than half of those taking part in the research (58%) said they were concerned about the impact of energy prices on their business, with 42% reporting they were very concerned. And almost two thirds (60%) of businesses were satisfied with the overall service they had received from their supplier, with 13% saying that they were dissatisfied.

The main reasons consumers said they were dissatisfied included the service being too expensive, poor customer service, and poor communication from their supplier.

Photo by krakenimages on Unsplash

Ofgem and Innovate UK continue search for ambitious energy transition projects

960 640 Stuart O'Brien

Ofgem and Innovate UK have announced the challenge areas for the third round of the Strategic Innovation Fund (SIF), which will open for applications in early September 2023. 

The SIF aims to find and fund ambitious, innovative projects with the potential to accelerate the energy transition to net zero at the lowest cost to consumers. 

Four innovation challenge areas have been set as the priorities for this year’s project proposals to address. They have been identified in consultation with the energy industry, consumer groups and other stakeholders.

The challenges reflect the SIF’s broad emphasis on delivering innovation which is aligned to Ofgem’s strategic change priorities.

Areas of focus include preparing networks to deliver a net zero power system in 2035, decarbonising heat, ensuring an equitable energytransition for the benefit of all consumers, and integrated approaches to increasing flexibility and energy storage across the energy system.

The four specific challenges for this round are:

1.       Whole system planning and utilisation of networks, to facilitate faster and cheaper network transformation and asset rollout

This is the challenge to improve and evolve the process of network planning and connecting new low-carbon energy supply and demand to the grid, to help meet net zero in a timely and cost-effective manner.

2.       Novel technical, process and market approaches to deliver an equitable and secure net zero power system

This challenge is about developing and scaling-up technologies, processes and markets which will deliver an equitable and fair net zero electrical system at all levels.  

3.       Unlocking energy system flexibility to accelerate electrification of heat

The challenge to address here is the visibility and coordination of electric heat demand, to enable effective network planning and flexibility for a greener and more affordable future energy system. 

4.       Enabling power-to-gas [P2G] to provide system flexibility and energy network optimisation

Using renewable energy to generate gas such as hydrogen can potentially allow long-term energy storage and bring energysystem benefits; the challenge is to unlock this potential. 

The first funding phase of this round will open in early September, when energy network companies working with other innovators can apply for up to £150,000 for a feasibility study to develop their ideas in response to the challenges.

After this discovery phase, those projects judged to have the greatest potential will go forward to the alpha phase in 2024, with additional funding of up to £500,000 to further develop their ideas over six months. 

Then after a further selection process, successful projects will go through to a final phase, beta. They will become multi-million-pound, large-scale demonstrators, working to prove their potential for rollout across energy networks as business-as-usual.

The aim is to speed up the development of new technologies and services that will help meet the urgent challenges facing energy networks and society, as we move towards a low-carbon future. 

Marzia Zafar, Deputy Director of Strategy and Innovation at Ofgem, said: “This is a great opportunity for  innovators to focus their talents on solving some of the major challenges the energy sector is facing on the road to decarbonisation. SIF has already proved to be a launchpad for some fantastic innovative thinking and we’re looking forward to seeing what exciting proposals we get in response to this year’s set of specific challenges.”

Matt Hastings, Deputy Director for the Ofgem SIF at Innovate UK, said: “This year’s SIF challenges express some of the most important areas that must be urgently tackled to decarbonise energy networks by 2035 – whether the backlog in new grid connections or the transition to electric heating. We encourage innovators everywhere to look at these challenges and opportunities and bring forward their ideas. The previous two rounds of the SIF have already funded more than 100 ground-breaking innovation projects and we look forward to exciting proposals taking shape over the coming months for this year’s programme.”

Image by Michal Jarmoluk from Pixabay