Ofgem stands for the Office of Gas and Electricity Markets. It’s a non-ministerial department of the government, tasked with overseeing and regulating the companies who operate in the UK’s gas and electricity networks.
Ofgem is an industry watchdog and regulator, similar to Ofsted (for education), Ofcom (for the broadcasting, telecommunications and postal industries) and Ofwat (for water).
In total there are over 60 regulatory bodies in the UK, supervising everything from food (Food Standards Agency) to charities (the Charity Commission).
It’s governed by the Gas and Electricity Market Authority (GEMA) and funded largely from the fines it dishes out to energy companies.
Ofgem was established in June 1999 when the functions and operations of the former gas regulator OFGAS (Office of Gas Supply) and former electricity industry regulator OFFER (Office of Electricity Regulation) were joined together.
Other notable things to happen that year – Tony Hawk landing the first 900, Pokemon fever sweeping the world and George W Bush announcing he would be running for the US presidency. Rank them as you will.
But Ogfem’s history actually dates back to 1986, when the gas and electricity market in the UK was liberalised. Before then, British Gas provided almost all energy from its origins in 1812.
With the markets being opened up to competition and households given a choice over their supplier, a regulator was required – step forward Ofgem.
The main objective of Ofgem is to protect consumers of gas and electricity. This is how they do it:
- Promoting value for money on tariffs from energy suppliers.
- Promoting security of the UK’s energy supply and ensuring it’s sustainable for future users.
- Supervising and developing competition within the markets.
- Implementing and regulating government schemes to deliver successfully.
What does Ofgem mean for you?
As an energy customer you’ll have little to no interaction with Ofgem itself, but its actions are felt by everyone in their dealings with energy suppliers. Ofgem works hard behind the scenes to influence the energy market for the better, improving everything from prices to relief schemes to customer services and what appears on your bills.
In recent years, Ofgem has helped make the energy market as fair and transparent as possible and simplify how consumers find information about tariffs and suppliers and compare them. Their data helps us at Look After My Bills to find you the best energy deal going.
What they do for you breaks down into six principal things:
- Administering energy price caps – Ofgem carries out the government’s legislation to set the level of and implement price caps on energy. Prepayment tariff price caps started in 2017, while default and standard variable tariffs were given price caps in 2019.
- Recording complaints – Ofgem doesn’t take customer complaints but does keep records of them as part of its market monitoring activity. They publish this data which shows how energy suppliers perform with customer service, useful for when you decide which company to go switch to. Ofgem can also punish suppliers for particularly poor service.
- Overseeing social and environmental schemes – Ofgem ensure energy suppliers are complying which schemes designed to make energy more accessible and affordable for all, especially vulnerable customers. This is also done with schemes to protect the environment.
- Setting what appears on energy bills – Ofgem specifies what information has to be included on your energy bill, which includes details about consumption, name of tariff and projected spending.
- Offering safety net for bankrupt suppliers – If your energy supplier goes bust, which happened a record number of times in 2018 and the start of 2019, Ofgem steps in to protect credit balances and supplies of households left without a working provider. Their process of Supplier of Last Resort (SoLR) assigns these accounts to a fit supplier in days. Crisis averted.
- Publishing guides and market information – Ofgem publishes its data about energy suppliers in the public domain, as well as guides to the market, in order to help increase knowledge and empower customers.
There are four steps to complaining about your gas or electricity bill or supplier if you have a problem.
1. Always contact the energy company directly. You can find their phone number and website details on your energy bill.
2. Explain what the problem is to the energy company and what you want them to do about it. Try and be as specific as possible.
3. If you need support, the Citizens Advice consumer service can help you through the process. They provide information and advice (for free) and lend your their expertise if needed. You can call them on 03454040506.
4. At this stage if your problem has still not been resolved, it’s time to complain to the energy ombudsman . They can investigate if a complaint hasn’t been sorted after eight weeks or if the energy company says they can do nothing more to resolve it. You can call the energy ombudsman on 03304401624.
We like to think of Ofgem as the energy police, here to protect customers and create a healthy environment where useful services like ours at Look After My Bills can help you get the best deal possible by switching gas or switching your electricity.