​Ofgem's Crackdown on Hidden Energy Fees

In a significant move towards enhancing transparency within the energy sector, Ofgem has announced the introduction of new measures to regulate energy brokers more effectively. This decision comes in response to businesses expressing significant concerns about the lack of protection against unfair practices by energy suppliers.

Following a comprehensive review of the non-domestic gas and electricity market in July of the previous year—a review initiated due to prolonged complaints from the business community—a demand for action emerged. Influential business groups, including UKHospitality, had been vocal in urging Ofgem to take decisive steps to eliminate the issue of hidden commission fees that escalate energy expenses.

Ofgem's recent update, dated 5 April, outlines the phased implementation of regulations to ensure that businesses are dealt with more transparently when entering new energy contracts. Beginning 1 July, Ofgem will expand its oversight to challenge suppliers engaging in unfair treatment of non-domestic customers. This includes broadening its standards of conduct and introducing a new supply licence.

A notable change, effective from 1 October, is that all new contracts for non-domestic customers will be required to display any broker fees explicitly. Additionally, this information must be readily accessible upon request. By December, suppliers are also mandated to establish appropriate complaint procedures and to exclusively collaborate with brokers that belong to an accredited redress scheme, like the Energy Ombudsman or the Utilities Intermediaries Association (UIA). This expansion of protection previously reserved for microbusinesses now extends to any small business with fewer than 50 employees.

Tim Jarvis, Ofgem's director general for markets, emphasized the regulator's commitment to ensuring compliance with these new rules and to ongoing collaboration with governmental and industry stakeholders to support non-domestic consumers further. Echoing this sentiment, Kate Nicholls, CEO of UKHospitality, welcomed the regulatory advancements as a crucial step towards safeguarding businesses against unfair energy supplier practices.

In conclusion, these developments mark a significant stride towards rectifying longstanding issues within the energy market, offering businesses greater clarity and protection. As these regulations come into effect, we invite your thoughts and experiences. How do you see these changes impacting your business? Share your views in the comments below.