Recommendation 57

The energy price crisis is putting continued strain on the remaining suppliers in the market. At the same time, Ofgem is proceeding with a programme of major regulatory reform with the objective to reverse its previous litany of shortcomings and shore up the financial resilience of the market. However, if its policies are poorly designed and executed, they could have the opposing effect and further destabilise the market, at additional cost to households and/or taxpayers. We remain unconvinced of Ofgem’s ability to undertake regulatory reform in a way that effectively manages the complex trade-offs or range of business models in the market. We are concerned that it will address its inability to monitor and enforce principle-based rules by implementing an overly prescriptive regulatory regime. We have outlined a wide range of actions Ofgem should take to improve its performance and we will provide greater oversight of the regulator in the future.