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38-669: The Office of Gas and Electricity Markets ( Ofgem ), supporting the Gas and Electricity Markets Authority ( GEMA, the Ofgem Board ), is the government regulator for the electricity and downstream natural gas markets in Great Britain . It was formed by the merger of the Office of Electricity Regulation ( OFFER ) and Office of Gas Supply ( Ofgas ). The authority's powers and duties are largely provided for in statute (such as

76-410: A cap on standard variable tariffs for energy customers, to be designed and implemented by Ofgem. The Domestic Gas and Electricity (Tariff Cap) Act 2018 (c. 21) received royal assent on 19 July 2018. It stipulated that the price cap would be in place from the end of 2018 until 2020, when Ofgem would recommend whether the cap should remain on an annual basis up to 2023. Ofgem would also review the level of

114-533: A dominant market position. One of the main purposes of this act was to harmonise the UK with EU competition policy, with Chapter I and II of the act mirroring the content of Articles 81 and 82 of the Treaty of Amsterdam (formally Articles 85 and 86 of the Treaty of Rome ). Deals with restrictive practices engaged by companies operating within the UK that distort, restrict or prevent competition. These are, primarily in

152-520: A market position, one must be guilty of wrongdoing for the chapter to apply. An example of the effects of the act is that in 2004, public schools were investigated for fee-fixing by the Office of Fair Trading , and in 2005 fifty of the leading schools (including Ampleforth , Eton , Charterhouse , Gresham's , Harrow , Haileybury , Marlborough , Rugby , Sevenoaks , Shrewsbury , Stowe , Wellington and Winchester ) were ordered to raise £3 million between them to be spent on charities nominated by

190-481: A two-stage process is involved. Firstly it must be identified if the firm possesses a dominant market position. This can be done through various concentration indices such as the Herfindahl-Hirchman Index (HHI). Generally, if a firm is found to have a market share over 40% then it is considered a threat to competition. There are no exemptions to chapter II as by its very definition as "abuse" of

228-420: A very high degree regulated by the labour market parties themselves (self-regulation) in contrast to state regulation of minimum wages etc. Regulation can be assessed for different countries through various quantitative measures. The Global Indicators of Regulatory Governance by World Bank 's Global Indicators Group scores 186 countries on transparency around proposed regulations, consultation on their content,

266-591: A violation has taken place up to a maximum of 3 years. Exemptions from prohibition are available if the firm can demonstrate that these practices are in the interest of the consumer through increasing market efficiencies or advancing technical progress. Chapter II deals with the abuse of a dominant position by a firm who uses practices such as predatory pricing , excessive prices, refusal to supply, vertical restraints and price discrimination to maximise profit, gain competitive advantage or otherwise restrict competition. In investigating alleged breaches of Chapter II

304-493: Is analysed in empirical legal studies, law and economics, political science, environmental science, health economics , and regulatory economics . Power to regulate should include the power to enforce regulatory decisions. Monitoring is an important tool used by national regulatory authorities in carrying out the regulated activities. In some countries (in particular the Scandinavian countries) industrial relations are to

342-615: Is government intervention in the private market in an attempt to implement policy and produce outcomes which might not otherwise occur, ranging from consumer protection to faster growth or technological advancement. The regulations may prescribe or proscribe conduct ("command-and-control" regulation), calibrate incentives ("incentive" regulation), or change preferences ("preferences shaping" regulation). Common examples of regulation include limits on environmental pollution , laws against child labor or other employment regulations, minimum wages laws, regulations requiring truthful labelling of

380-513: Is the Competent Authority responsible for approving ADR entities in the energy sector. Ofgem has only ever approved one ADR entity: Ombudsman Services. Ofgem launched an Energy Industry Voluntary Redress Scheme in 2018 to redistribute money paid by energy companies who have breached their operating licence conditions. Recipients of the fund include vulnerable energy consumers and developers of energy products and services that reduce

418-407: Is to protect the interests of consumers, where possible by promoting competition. The Authority‘s main objective is to protect existing and future consumers' interests in relation to gas conveyed through pipes and electricity conveyed by distribution or transmission systems. Consumers' interests are their interests taken as a whole, including their interests in the reduction of greenhouse gases and in

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456-968: The Gas Act 1986 , the Electricity Act 1989 , the Utilities Act 2000 , the Competition Act 1998 , the Enterprise Act 2002 and the Energy Act 2004 , the Energy Act 2008 and the Energy Act 2010 ) as well as arising from directly effective European Union legislation. Duties and functions concerning gas are set out in the Gas Act and those relating to electricity are set out in the Electricity Act. Its primary duty

494-568: The United States Environmental Protection Agency and Occupational Safety and Health Administration . Competition Act 1998 The Competition Act 1998 (c. 41) is the current major source of competition law in the United Kingdom , along with the Enterprise Act 2002 . The act provides an updated framework for identifying and dealing with restrictive business practices and abuse of

532-486: The Utilities Act 2000 , designed to protect national security, relating to concerns about smart meters and Renewable Heat Incentive projects. Under the Alternative Dispute Resolution for Consumer Disputes Regulations 2015, if an energy company fails to resolve a complaint through their own customer service efforts they will be required to advise the consumer of an approved ADR body. Ofgem

570-455: The abuse of market power, and provide Ofgem with sufficient power to tackle any abuse. Moreover, consumer surveys showed good awareness of the ability to switch, high and rising switching rates away from the former monopoly suppliers, and substantial and continuing falls in their market shares. Two years after the removal of the last price controls, in April 2004, Ofgem published a major review of

608-606: The ancient world, and gold may have operated to some degree as an international currency. In China, a national currency system existed and paper currency was invented. Sophisticated law existed in Ancient Rome . In the European Early Middle Ages , law and standardization declined with the Roman Empire, but regulation existed in the form of norms, customs, and privileges; this regulation was aided by

646-680: The authority of statutes. Legislators created these agencies to require experts in the industry to focus their attention on the issue. At the federal level, one of the earliest institutions was the Interstate Commerce Commission which had its roots in earlier state-based regulatory commissions and agencies. Later agencies include the Federal Trade Commission , Securities and Exchange Commission , Civil Aeronautics Board , and various other institutions. These institutions vary from industry to industry and at

684-524: The cap at least every six months; from October 2022 reviews were to be conducted every three months, to reflect volatility in wholesale prices. Ofgem refers to this mechanism as the "default tariff" price cap, to distinguish it from the "prepayment" price cap, its other energy price cap. Between July 2021 and May 2022, 29 retail suppliers of gas and electricity collapsed, largely due to unprecedented increases in wholesale gas prices. Ofgem arranged for their customers to be transferred to other companies but this

722-589: The energy market as well as provide the certainty investors have called for," Ofgem CEO Dermot Nolan in announcing the investigation. In August 2016 Ofgem said that it would implement the CMA's recommendation that suppliers should be required to provide the details of customers who have been on expensive tariffs for three years or more to rival suppliers. Ofgem also said that it would impose an interim price cap on customers using pre-payment meters. In October 2017, Prime Minister Theresa May announced her intention to introduce

760-1093: The environmental impact. The scheme is managed by the Energy Saving Trust . Notable payments into the scheme include: £12.5m from PayPoint for breaking the 1998 Competition Act; £8.9 from OVO Energy for overcharging customers; £4.5m from Hornsea Wind Farm , £4.5m from Npower and £1.5 from UK Power Networks for failing to remain connected after a lightning strike causing a widespread blackout on 9 August 2019 ; £2.8m from OVO Energy, £2m from Scottish Power , £1.3m from British Gas , £1.2m from Shell Energy , £1m from SSE plc and amounts from £7k to £713k from 13 other energy suppliers for overcharging between 2013 and 2020; £1.5m from Utility Warehouse for treating customers unfairly and increasing their financial distress; and £1m from SSE plc for sending inaccurate customer statements. Directors General of Ofgas Director General of OFFER Chair and Chief Executive of Ofgem Chair of Ofgem Chief Executive Officer of Ofgem Government regulation Regulation in

798-440: The federal and state level. Individual agencies do not necessarily have clear life-cycles or patterns of behavior, and they are influenced heavily by their leadership and staff as well as the organic law creating the agency. In the 1930s, lawmakers believed that unregulated business often led to injustice and inefficiency; in the 1960s and 1970s, concern shifted to regulatory capture , which led to extremely detailed laws creating

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836-606: The finances of supplier companies, and that the government overlooked this lack of supervision because it prioritised competition over market regulation. In response, Ofgem accepted that its previous financial resilience regime was not sufficiently robust, and had contributed to some of the supplier failures since August 2021. In September 2018, the Guardian published a report claiming that two Ofgem experts had been independently threatened with criminal sanctions if they publicly revealed information. Ofgem allegedly invoked section 105 of

874-479: The form of horizontal agreements (agreements to collude between firms on the same level of the supply chain such as retailers or wholesalers). These agreements could be to limit output, collusively share information, fix prices, tender collectively and share markets out. Competition and Markets Authority (CMA) is responsible for prosecuting such firms who engage in these activities, and are able to levy fines up to 10% of annual global turnover for every year in which

912-735: The gas and electricity supply industries was enacted by the Gas Act 1986 and the Electricity Act 1989 . Section 1 of the respective Acts created the roles of Director General of Gas Supply and the Office of Gas Supply (Ofgas), and the Director General of Electricity Supply and the Office of Electricity Regulation (OFFER). These were economic regulators independent of government, but accountable to Parliament. This arrangement separated their regulatory decisions from political control in order to provide greater long term regulatory certainty and to encourage market entry and investment. The duties of

950-547: The industry to set up and fund the Energy Supply Ombudsman in response to concerns over the handling of customer complaints. Ofgem's Energy Supply Probe, published in 2008 after increases in world fuel prices led to the doubling of the energy bill for a typical household, found that the market was still dominated by the " Big Six " suppliers: more than 70% of customers were still with their former monopoly suppliers, and new entrants had captured less than 0.3% of

988-581: The ingredients in food and drugs, and food and drug safety regulations establishing minimum standards of testing and quality for what can be sold, and zoning and development approvals regulation. Much less common are controls on market entry, or price regulation. One critical question in regulation is whether the regulator or government has sufficient information to make ex-ante regulation more efficient than ex-post liability for harm and whether industry self-regulation might be preferable. The economics of imposing or removing regulations relating to markets

1026-406: The market. Ofgem implemented a number of measures which improved the information provided to customers and made it easier for them to switch suppliers. The Big Six were obliged to separate their accounting for the supply and generation businesses, and Ofgem noted concerns over market abuses and unfair pricing. In June 2014 Ofgem announced a Competition and Markets Authority (CMA) investigation into

1064-469: The regulators set price controls which fixed the maximum price that the monopoly suppliers could charge domestic customers. These controls remained in place when markets started to be liberalised, and were removed in stages between 2000 and 2002. Ofgem's decision to remove price controls was based on their assessment that competition was developing well at that time and that the Competition Act 1998 , being effective since March 2000, would deter companies from

1102-499: The regulators were prescribed in Section 4 of the Gas Act 1986 and Section 3 of the Electricity Act 1989. Starting in the 1990s, the supply of electricity and gas to retail consumers in the UK has been unbundled from the rest of the industry. At the time of privatisation, British Gas and the regional public electricity suppliers held a monopoly on supplying all domestic gas and electricity consumers respectively. In 1997, British Gas

1140-689: The security of the supply of gas and electricity to them. Since 2010 the Authority has imposed nearly £100 million in fines and redress levies against energy suppliers, including a £12 million redress levy on E.ON in May 2014, and a £1 million redress levy on British Gas in July 2014. The Gas and Electricity Markets Authority is governed by the Chairman Martin Cave, executive members as well as non-executive members. Jonathan Brearley

1178-418: The social, political, psychological, and economic domains can take many forms: legal restrictions promulgated by a government authority, contractual obligations (for example, contracts between insurers and their insureds ), self-regulation in psychology, social regulation (e.g. norms ), co-regulation, third-party regulation, certification, accreditation or market regulation. State -mandated regulation

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1216-441: The state of competition in the domestic energy supply markets, concluding that supply competition had delivered substantial benefits for all consumers and that the markets were competitive, though not yet mature. Between 2005 and 2007, Ofgem carried out a Supply Licence Review, resulting in simplification of supply licences, with the aim of reducing barriers to entry to the supply market, and enabling innovation. In 2006, Ofgem required

1254-446: The trading practices and competitiveness of the country's "Big Six" energy companies: Centrica , SSE plc , RWE npower , E.ON , Scottish Power and EDF Energy . The investigation, which took two years, followed a referral by Ofgem to the competition regulator. "There is near-unanimous support for a referral and the CMA investigation offers an important opportunity to clear the air. This will help rebuild consumer trust and confidence in

1292-612: The unified Christian identity and a sense of honor regarding contracts . Modern industrial regulation can be traced to the Railway Regulation Act 1844 in the United Kingdom, and succeeding Acts. Beginning in the late 19th and 20th centuries, much of regulation in the United States was administered and enforced by regulatory agencies which produced their own administrative law and procedures under

1330-529: The use of regulatory impact assessments and the access to enacted laws on a scale from 0 to 5. The V-Dem Democracy indices include the regulatory quality indicator. The QuantGov project at the Mercatus Center tracks the count of regulations by topic for United States, Canada, and Australia. Regulation of businesses existed in the ancient early Egyptian, Indian, Greek, and Roman civilizations. Standardized weights and measures existed to an extent in

1368-610: Was appointed Chief Executive of Ofgem from February 2020. The liberalisation and privatisation of the energy markets in the United Kingdom began with the Margaret Thatcher Government in the 1980s (often called the Thatcher-Lawson agenda, due to the key role of Nigel Lawson in the Thatcher government cabinet). Aspects of the UK's model have been adopted by EU legislation. The privatisation of

1406-403: Was not possible for the 1.7 million customers of the largest company to enter administration , Bulb Energy , which instead entered a special administration regime underwritten by the UK government. A July 2022 report "Energy pricing and the future of the energy market" by Parliament's Business, Energy and Industrial Strategy Committee found that Ofgem had been incompetent in its supervision of

1444-404: Was split (demerged) into Centrica and BG plc , in order to separate gas supply from its production and distribution. Between 1996 and 1999, domestic energy consumers were gradually able to choose their supplier. Finally, in May 1998 the domestic gas market was fully opened to competition, followed by the domestic electricity market in May 1999. Before there was competition in domestic markets,

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