Ofgem

Ofgem

1. Protecting the interests of current and future electricity and gas consumers

   • Promote value for money, which includes competition issues
     • Reduced the number of tariffs energy companies could offer to household to just four
       • Made it compulsory for them to tell consumer if there was a tariff that would be cheaper over the next 12 months
     • Aim to bring next-day switching
       • Currently a month
     • Fining firms that mis-sell
       • Fines up to £10.5 million
       • Money distributed to customers facing fuel poverty
     • Transparency of costs, prices and profits
       • Must publish seperate accounts for generation and supply
       • Most publish whole sale prices 3 month in advance
         • Helps small retailers who buy their gas and energy from the big-six
     • Gas and electricity network operators are told the prices they are allowed to charge by Ofgem
   • Ensure security of supply
     • Free market would fail to prevent black outs as extra capacity for peak demand is not cost efficient
     • Strategic resource
       • Cannot be stored
       • Wind is unreliable
   • Promote sustainability , reducing energy consumption away from fossil fuels
     • "Smart meters" provide constant reading oh household useage
       • Due for every home by 2020 for free
       • Pay for themselves by replacing meter readers
       • Help consumers reduce their bills
       • Allows energy companies to charge us more during peak periods of demand
         • Ofgem settling on 30 minute charging period
     • Annual competitions with up to £50 million prize more, for companies to find ways to reduce demand or become more eco-friendly
   • Implement government regulations
     • Reducing UK emissions over 1990-2050 by 80%
     • Growing proportion of renewable energy
     • Buy energy from small scale producers, homes with solar pannels
     • Reduce domestic consumtion, install insulation
     • Discounts worth £300 million annulay to the fuel impoverished
   • Funded mostly from levy from companies (£83 million)

2. "Ofgem may have unwittingly contributed to the problem of weak competition and high prices"

   • Big-six profits up significantly since Ofgem started giving more frequent and detailed instruction