Ofgem (the Office of Gas and Electricity Markets) is the regulator for the energy market throughout Great Britain. Its stated purpose is to protect energy consumers by ensuring they are treated fairly and benefit from a cleaner, greener environment.

Ofgem led the industry programme to establish the Retail Energy Code and has an important role to play in ensuring the effectiveness of code arrangements.

Governance

Ofgem was formed in 2001 following a merger of the Office of Electricity Regulation (OFFER) and the Office of Gas Supply (Ofgas). Ofgem’s powers and duties are established through a statutory framework set by UK Parliament.

Ofgem is governed by the Gas and Electricity Markets Authority (GEMA). GEMA determines Ofgem’s strategy and is the ultimate decision-maker for certain regulatory matters including price controls and enforcement measures. Ofgem recovers its costs from the licensed companies it regulates through an annual licence fee.

Ofgem regulates the energy industry by granting licences to companies which fulfil market roles. Ofgem ensures that those companies comply with the conditions of their licences. In cases of non-compliance, Ofgem has powers to apply enforcement measures or revoke licences.

Role within REC

In 2017, Ofgem consulted on proposals to introduce a new dual-fuel code. Following an iterative development process, the full REC arrangements were switched on in September 2021, as Ofgem designated REC V2.0.

Ofgem awards licences to organisations which require them to become REC Parties and comply with REC requirements. Where the Code Manager and Performance Assurance Board apply compliance measures in accordance with the PAB Procedures, in most circumstances Ofgem will be notified.

GEMA carries out the role of the Code Authority for the REC (a role that it holds within many other industry codes). In this role, it is the ultimate decision-maker for whether Change Proposals are implemented into the REC. For most Change Proposals, the Authority will only make a decision on change where an appeal is raised, or where a REC Committee disagrees with the recommendation of the Code Manager. However, certain Change Proposals, including those which are expected to have a material impact on Consumers or those related to a Significant Code Review, are raised as requiring explicit Authority Consent – that is, the Authority is required to make a determination on implementation.