The Government’s and Ofgem’s latest energy policy and regulation updates as of 1st July 2022

The energy industry is fast-moving and reactive to a volatile and changing market. As such, policies and regulations are updated to modernise the grid, and processes, to reduce costs and emissions.

Below are some of the latest headline policies and regulations published by the energy industry regulator, Ofgem, and the Government:

Supplier Failure Processes

With recent market volatility, the energy industry has experienced more and more suppliers fail to financially survive market increases and deliver contract agreements with consumers; this has also caused accumulating debts of the failed suppliers. There are systems in place to recover supplier debts, but, in some cases, these are passed to the consumer through increased charges.

However, the cost incurred by the SoLR (Supplier of Last Resort) will now be allocated to a separate business market sector. The business gas sector will not incur any cost for gas supplier failures within the domestic sector and vice versa. This change to the gas industry code is expected to save the business gas sector over £100 million between 2022 and 2023.

Switching Programme

The current arrangements for switching suppliers in the UK were developed in the 1990s and can be complex, with errors leading to delays and costs for the supplier and consumer. Ofgem has announced a Switching Programme, set to go live in July 2022, to modernise and simplify switching suppliers and make it easier for consumers.

In the initial stage of the programme, a domestic consumer will be able to submit a request to switch suppliers and be with their desired supplier within 5 working days. With the programme fully implemented, a consumer should be able to switch by the end of the next working day. For businesses, this process should take 2 working days.

Smart Metering Implementation Programme

Switching to a smart and flexible energy system is critical to reducing emissions and achieving a net-zero grid. Smart meters are a part of this transition. They enable consumers to see data on their consumption and can make proactive changes to how much they use and the efficiency of their devices. They also help the supplier and system operators to analyse demands to optimise our systems.

In January 2022, the Government introduced their latest project, the Smart Metering Implementation Programme, to bring the next generation of smart meters to homes and businesses. This programme sets a target-based framework for suppliers to complete a minimum number of smart meter installs per year until 2025.

Green Gas Support Scheme

The Government is also pushing for green gas sources via the Green Gas Support Scheme (GGSC). This provides a financial incentive to produce biomethane gas from the anaerobic digestion of plants to increase the proportion of green gas in the generation mix.

The scheme will be funded by a Green Gas Levy (GGL), paid by suppliers from 1st April 2022 annually, depending on the number of meters they supply.

Microbusiness Protection

Ofgem has also focused on the microbusinesses market in their March 2022 strategic review. As a result, they will introduce new measures in October and December 2022 to increase protection for microbusiness consumers.

A part of the new measures will be for suppliers to ensure brokers confirm their fees to consumers before a contract is agreed upon. Consumers also have the right to bring complaints about a broker to an independent dispute resolution provider.

To assist with switching suppliers, consumers are now no longer required to submit a written termination notice to their supplier before the contract end date.