Response to Ofgem’s draft work programme 25/26
Response to Ofgem’s draft work programme 25/26 185 KB
We are broadly supportive of Ofgem’s proposed priorities for the 2025/26 financial year, and welcome the clear focus on how its activities will support delivery of the clean power mission. To advance towards clean power, public confidence needs to be maintained in the regulatory arrangements. Repeating the level of returns seen under current and previous network price controls risks the legitimacy of the regime, jeopardising future investments.
Ofgem should provide more clarity on how it plans to support economic growth. This should include much more ambitious action to reform the retail market to support better competition, more innovation, adoption of low carbon technologies and flexible energy use. We continue to support a more outcomes-based Consumer Duty framework, which could upgrade standards and reduce reliance on prescriptive rules for more complex products and services, including more radical reform of price protection.
We welcome Ofgem’s plans to do its part to tackle the affordability challenge in energy through its proposed debt relief scheme, and we think it should toughen its rules on billing to tackle the problems that can often tip people into debt in the first place. It’s vital that the Government also does its part, by putting in place targeted bill support for those who are struggling to afford their energy. This safety net can also help unlock important reforms which can deliver net zero most efficiently, like the rebalancing of policy levies and locational pricing.
We’re concerned that Ofgem’s plans for short term standing charges reforms risk distracting it from more pressing policy issues. The plans carry risk of some consumers losing out with little gain for those who might benefit, and will in any case simply be a stopgap measure ahead of the longer term review which will look at more coherent solutions. It’s also unclear how they align with Ofgem’s work on the evolution of price protection, which appears stalled a year on from to Ofgem’s last discussion paper. Given the significant opportunity cost, Ofgem should not take this short term work on standing charges forward.
There are areas where Ofgem should be more specific about work it expects to carry out, especially where there is already a convincing case for action. For example, we think Ofgem should:
prepare for its new heat networks role by conducting quantitative research to understand consumer experiences,
ensure suppliers increase the pace of smart meter installation and deliver an improved consumer experience, including tackling back billing, and
undertake targeted work to find solutions for the protection gaps experienced by microbusinesses.