Ofgem is the Office of Gas and Electricity Markets. They are a non-ministerial government department and an independent National Regulatory Authority, recognised by EU Directives. Their principal objective when carrying out their functions is to protect the interests of existing and future electricity and gas consumers. They do this in a variety of ways including:
- promoting value for money
- promoting security of supply and sustainability, for present and future generations of consumers, domestic and industrial users
- the supervision and development of markets and competition
- regulation and the delivery of government schemes.
They work effectively with, but are independent of, government, the energy industry and other stakeholders within a legal framework determined by the UK government and the European Union.
How are they governed?
They are governed by the Gas and Electricity Markets Authority (GEMA). This consists of non-executive and executive members and a non-executive chair. Non-executive members bring experience and expertise from a range of areas including:
- industry
- economics
- consumer and social policy
- science and the environment
- finance and investment
- European energy issues.
The Authority determines strategy, sets policy priorities and makes decisions on a wide range of regulatory matters, including price controls and enforcement. The Authority's powers are provided for under the following:
- Gas Act 1986
- Electricity Act 1989
- Utilities Act 2000
- Competition Act 1998
- Enterprise Act 2002
- measures set out in a number of Energy Acts.
Transparency
They try to be transparent in their work at all times. Their practices include:
- providing full, timely and thorough consultation opportunities for interested parties in the way they explain their approaches and reach our decisions , including our strategies and plans
- arranging meetings and workshops as they share with stakeholders the analyses underpinning their decisions
- holding briefings and occasional seminars for interested parties, including Parliament and the Press
- publishing the minutes of Authority meetings.
How are they funded?
They recover their costs from the licensed companies we regulate. Licensees must pay an annual licence fee, which is set to cover their costs. They are wholly independent of the companies they regulate.
They operate a cost control framework consistent with the outcome of their Spending Review 2015 settlement. This sets out a cumulative real terms reduction of -15% by 2019-20.
