Ofgem has announced new rules that will take effect from 1st July 2024, a move to enhance fairness, transparency, and support for non-domestic energy consumers. These changes aim to improve customer service, simplify dispute resolution, and get greater clarity on broker fees for businesses, public services, utilities, charities, and more.
The initiatives stem from concerns raised last year about the non-domestic energy market. Ofgem, in collaboration with the Department for Energy Security and Net Zero (DESNZ), conducted a comprehensive review, revealing that 58% of businesses were concerned about energy prices, with 42% being very concerned. Despite 60% of businesses expressing overall satisfaction with their energy suppliers, issues like high costs, poor customer service, and inadequate communication were common complaints among dissatisfied consumers.
Ofgem’s new rules mark a significant step towards ensuring fairer treatment, better support, and increased transparency for non-domestic energy consumers. As these rules come into force, businesses of all sizes can look forward to more equitable and transparent dealings with their energy suppliers, paving the way for a more reliable and supportive energy market.
Key Changes and Their Impact On Businesses
The new rules are a response to widespread concerns about poor customer service, unexplained price hikes, and difficulties in obtaining appropriate energy contracts faced by many businesses. Ofgem’s initiatives are set to bring substantial improvements across the non-domestic energy sector, including the following:
- Expanded Standards of Conduct: Previously applicable only to micro business consumers, the Standards of Conduct will now apply to all businesses, regardless of size. This expansion gives Ofgem the authority to take action against suppliers that fail to treat non-domestic customers fairly.
- Enhanced Support for Micro and Small Businesses: From 1st July 2024, non-domestic suppliers must direct micro business consumers to Citizens Advice and Citizens Advice Scotland for support and advice on energy-related issues.
Starting December 2024, small business consumers will also be covered under this requirement, contingent on the new definition entering legislation.
- Transparency on Broker Fees: From 1st October 2024, all non-domestic energy contracts must clearly display any broker fees. This requirement, initially for micro-business consumers, will extend to all businesses, ensuring transparency in energy costs.
- Improved Complaint Handling: Suppliers will be required to have suitable complaint-handling processes for small business consumers by December 2024. Additionally, these consumers will have access to the Energy Ombudsman for unresolved issues.
- Regulated Third-party Intermediaries (TPIs): Suppliers will need to collaborate only with TPIs that are members of a redress scheme when securing small business contracts. This change aims to ensure that businesses can access fair dispute resolution services.
Ofgem’s Director General for Markets, emphasised the importance of these changes, stating, “too many businesses have experienced issues with some energy suppliers, from difficulty getting the right contracts, unexplained price hikes, and poor customer service.”
These new rules align with the government’s plans to expand the definition of small businesses, allowing those with fewer than 50 employees or meeting specific turnover or energy usage criteria to bring complaints to the Energy Ombudsman. This expanded definition will provide broader access to independent support for energy-related disputes.