Ofgem’s enhanced protection for businesses continues, as the second phase of new rules came into force from 1 October 2024. These changes affect the commercial energy sector, including all businesses, public services, utilities, and charities.
Under the standards, all domestic and non-domestic energy customers must now be treated fairly by gas and electricity suppliers.
Key Changes
- On 5 April 2024, energy regulator Ofgem announced an expansion of its rules, aimed at promoting fairness, support, and transparency within the non-domestic energy sector.
- The first phase of measures commenced on 1 July 2024 and included expanding the suppliers’ Standards of Conduct to all businesses, irrespective of size, thereby granting Ofgem the authority to address instances where energy suppliers fail to treat non-domestic customers fairly.
- From 1 October 2024, broker fees must be clearly displayed in non-domestic energy supply contracts, and suppliers must provide this information upon request. This aims to improve financial transparency across the industry.
- In December 2024, Ofgem is set to update the Complaints Handling Standards to require energy operators to have complaints processes for small business consumers, including direction to the Energy Ombudsman in the event of an unresolved dispute. For small businesses, suppliers will be required to only collaborate with energy brokers who are members of a redress scheme.
- Ofgem’s efforts in this area are set to continue post-December 2024: on 10 September 2024 the regulator launched a strategy document Consumer Confidence: A Step Up In Standards setting out its ambition to improve customer service for domestic and non-domestic energy consumers, so we encourage you to watch this space.
How did we get here?
The changes follow a joint report produced by Ofgem and the Department for Energy Security and Net Zero (DESNZ), which highlights widespread dissatisfaction and concerns shared by businesses about ongoing issues including service affordability, poor customer service and insufficient complaint handling from energy suppliers in the non-domestic energy market.
Is this an Improvement for the Energy Sector?
Whilst requiring more from energy providers, we anticipate this will assist business customers when negotiating new or continuing contracts with those suppliers, thanks to increased openness on broker fees and the requirement for fairness. Business customers can now expect, and should seek, the same transparency from energy suppliers as afforded to domestic customers. The ongoing changes also provide businesses with more options for dispute resolution in case of a supplier dispute, potentially saving legal costs.
For professional advice on your business’ dispute(s) with an energy supplier, please contact a member of our Commercial Disputes team, who will be happy to assist.