Ofgem to re-focus energy supply regulation on consumer outcomes
Ofgem has confirmed plans to shift to a more outcomes-based approach to regulating domestic and non-domestic energy suppliers, instead of its more typical approach of setting prescriptive rules.
On 23 June, Ofgem published seven desired outcomes that it believes every energy consumer should receive. It intends to implement the outcome on energy bills first and has published a consultation seeking views on implementation options. Through this outcomes-based work, Ofgem aims to improve energy customer experience whilst encouraging innovation in the energy supply market.
Consumer outcomes
Currently, Ofgem regulates suppliers using a set of prescriptive and principles-based rules. A shift to outcomes-based rules represents a major change in its regulatory approach. Ofgem has said this approach gives suppliers flexibility in how they operate, while holding them accountable for delivering good outcomes.
The outcomes are as follows:
Improved billing for customers
Ofgem highlighted that billing issues are the single largest complaint category, making up 29% of all domestic complaints and 39% of all non-domestic complaints made to suppliers. It has therefore prioritised improved billing outcomes as the first to implement, and has outlined three main options to do so. This includes an outcomes-only approach, an outcomes framework with specific targeted protections for what it considers high-risk harms, and a mixed approach of billing outcome and prescriptive rules.
Next steps
Ofgem is collecting responses to its consultation until 19th August. Any changes to rules will be phased and focused on one outcome at a time, with the billing outcome due to be the first to be implemented in 2027.
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