WIREDGOV

Today’s Energy Bill gives Government backing to Ofgem’s request to be given powers to compensate consumers when energy companies break the rules. The Department of Energy and Climate Change has also published yesterday Ofgem’s report to Government on Gas Security of Supply.

Welcoming the new redress powers in the Bill, Ofgem’s Senior Partner for enforcement, Sarah Harrison, said: “Ofgem has been campaigning for consumer redress powers, with backing by consumer groups and we welcome Government’s decision to grant us these new powers which will help Ofgem to better protect consumers’ interests.

“Ofgem has pursued redress from companies on a voluntary basis when we resolve cases, including £1.7m from E.ON earlier this week and £4.5m from EDF Energy in March this year. These powers will allow us to direct compensation to consumers who have been adversely affected by licence breaches. Together with our Retail Market Review proposals for a simpler, clearer and fairer energy market, these powers are good news for consumers.”

Gas report

Commenting on the publication of the Gas Report, Ofgem’s Senior Partner for Markets, Andrew Wright said: “Britain’s gas market has worked well up to now in delivering security of supply for consumers and our report concludes that disruption to gas supplies for consumers remains highly unlikely.

“But increasing dependency on international gas markets at a time of growing global demand for gas and possible tightening of future LNG supplies could have consequences for both security of supply and energy prices. The impact of a large disruption to gas supplies would also increasingly impact on electricity supply. This is because the share of gas in electricity generation could increase from around 40 per cent today to over 60 per cent by 2020.

“Ofgem believes the growing importance of gas imports and increased uncertainty in global gas markets means that Government should give serious consideration to taking further action to improve gas security for consumers. Ofgem looks forward to the Government’s response. “

1. Ofgem’s response the main thrust of the Government’s energy market reforms was published on Friday 23 November and can be found at: http://www.ofgem.gov.uk/Pages/MoreInformation.aspx?file=20121123-EMR.pdf&refer=Media/PressRel

2. Ofgem’s Gas Security of supply report can be found at: http://www.ofgem.gov.uk/Markets/WhlMkts/monitoring-energy-security/gas-security-of-supply-report/Pages/index.aspx

3. Ofgem’s Gas Security of Supply report sets out a range of possible options for Government to take and is available from both DECC and Ofgem’s websites. In another report to Government in October Ofgem concluded that electricity supplies were set to tighten, with margins falling from 14 per cent today to 4 per cent in 2015/16. This is due to the closure of coal fired generation under EU environmental legislation.

4. In 2009 Ofgem’s Project Discovery warned that action was needed to ensure that Britain’s Energy Supplies remained secure. It concluded that an unprecedented combination of the global financial crisis, tough environmental targets, increasing gas import dependency and the closure of aging power stations has combined to cast reasonable doubt over whether the current energy arrangements will deliver secure and sustainable energy supplies. Ofgem also forecast that the increase in investment would also lead to an upward pressure on energy prices and of the danger of wholesale gas spikes in gas.

5. Ofgem is the Office of the Gas and Electricity Markets, which supports the Gas and Electricity Markets Authority, the regulator of the gas and electricity industries in Great Britain. The Authority's functions are set out mainly in the Gas Act 1986, the Electricity Act 1989, the Competition Act 1998 and the Utilities Act 2000. In this note, the functions of the Authority under all the relevant Acts are, for simplicity, described as the functions of Ofgem.

For further press information contact:

Lisa O’Brien: 020 7901 7426
Chris Lock: 020 7901 7225
Mark Wiltsher: 020 7901 7006
Out of hours contact: 07774 728971 or 07766 511470