How electricity is regulated in the UK by Ofgem

By Energy Company Numbers on April 9, 2015 in Help and advice

As any homeowner can attest, reviewing an electricity bill can be a challenge.  With prices increasing all the time, some residents wonder if there is any regulation at all going on in the energy industry.

In the United Kingdom, there is in fact a government institution responsible for regulating the gas and electric industry in the UK.  Let’s take a moment to review this institution, and cover who they are, how they are governed, how they are funded, what kind of transparency exists with them, and how they work.

The Office of Gas and Electricity Markets.

Known as OfGem, or the Office of Gas and Electricity Markets, OfGem operates as a non-ministerial government department within the independent National Regulatory Authority.  It is recognized directly by the EU Directives.  The primary goal of OfGem is to protect the consumer.  Simply put, OfGem exists to protect the interests of those who consume electricity and gas both now and in the future.  OfGem reaches these goals in a number of ways designed to bring about both immediate and long lasting change.

To help promote the interests of consumers, OfGem works towards the security of power supply for the electrical grid, as well as long-term sustainability.  The department attempts to promote value for money, as well as supervising the marketplace to ensure a healthy level of competition for consumers.  As a final note, OfGem is responsible for rolling out various government initiatives and regulations into the industry.

How Is OfGem Regulated?

It should be noted that although OfGem works with the government on a number of energy related issues, it is technically independent of the government, individuals who are stakeholders in the industry, and businesses in the energy industry.  While OfGem works to remain independent, they also try to retain healthy lines of communication with these various groups to bring about quick and effective change when required.  All actions done by OfGem are done within a legal framework.

OfGem is governed by the Gas and Electricity Markets Authority, otherwise known as GEMA.  GEMA is comprised of a number of executives and non-executives from relevant fields.  As a result, a range of insight is brought to the authority by individuals with specializations in industry, economics, European energy issues, finance and investment, science and the environment, consumer and social policy, and economics.

Comprised of a wealth of experience, GEMA is primary responsible for determining the strategies, setting the priorities, and making the decisions that shape and influence the energy market within the UK.  Having an influence on the shaping and implementation of a number of energy matters, GEMA continues to work towards a healthy energy industry.  Their authority is provided by a number of acts, beginning with the Gas Act of 1986, and the electricity act of 1989.  In addition, the Competition Act of 1998, the Utilities Act of 2000, and the Enterprise Act of 2002 provide GEMA with additional powers to regulate the energy industry as well as OfGem.

Is OfGem Transparent?

One of the requirements put on OfGem is that it remains as transparent as possible in its actions.  As a result, OfGem has set a number of goals to reach with everything they do.  This includes providing a full, timely, and thorough consultation opportunities for anyone interested in what OfGem does.  In addition, OfGem arranges meetings with individuals invested in the energy market.  OfGem will also hold seminars and briefings to interested parties.  Finally, OfGem publishes minutes of their meetings for everyone to read.

Who Is Funding OfGem?

This energy market regulator is funded by the licensed companies it regulates.  Every business in the energy market must pay an annual license fee, which is designed to cover the costs of OfGem.

What Are The Themes And Direction of OfGem?

OfGem has a number of themes that it uses to steer its course.  The first is promoting value for money. The second is promoting security of supply.  The third is promoting sustainability.  The forth is delivering on governmental programs.  Together, these four themes help direct not only short-term and immediate actions and responses, but long-term planning as well.  As a result, OfGem is constantly looking into the future, trying its best to ensure the most healthy energy market for consumers in the UK.

Where Can I learn More About OfGem?

If you would like to learn more about the Office of Gas and Electric Markets, then the best source is their own website, where they list this information in greater detail.  In addition, there are a number of secondary websites run by local energy providers, where the role of OfGem is described in detail.  Finally, consider looking at the GEMA website, as it has a great deal of information regarding the regulation of the UK energy market, as well as their role in overseeing ofGem.

About the Author

Energy Company NumbersView all posts by Energy Company Numbers
Energy Company Numbers is a telephone number directory service dedicated to helping UK consumers keep in touch with their energy suppliers.


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