Energy executives who cause significant harm to consumers could be blocked from receiving bonuses under a government overhaul of the energy regulator Ofgem. The new powers will prevent executives from netting windfalls if they breach licence conditions in a way that is seen to significantly harm billpayers. The move will require legislative change.
The reforms mark the first major update to Ofgem’s remit since it was founded in 2000. The regulator has been accused of not coming down hard enough on energy firms while households and businesses faced surging prices. Labour’s response is to hand Ofgem new responsibilities to act as a true consumer champion.
Ofgem will be given stronger powers to enforce consumer law directly, meaning it will no longer need to go through lengthy court processes to ensure customers get what they are owed. The regulator’s remit will also be expanded to allow it to regulate in new areas of the market if needed. Oversight of home upgrade schemes will be transferred to the Warm Homes Agency within government.
Energy Secretary Ed Miliband said: “This Government is fighting people’s corner, and today we set out steps to strengthen protections for energy consumers. This includes tough and fair measures to ban energy company bonuses if they break the rules.” Interim Ofgem boss Tim Jarvis said the review enables changes at a “more systemic level” to ensure the energy system works for consumers.
The End Fuel Poverty Coalition welcomed the stronger enforcement powers, but stressed vulnerable households must always come first. Citizens Advice said Ofgem should seize the opportunity to bring about a more innovative market. However, Energy UK expressed disappointment that the review fell short of radical reform, arguing the regulator’s past use of powers was the fundamental issue.
