Explainer
Ofgem is the regulator for the gas and electricity markets in Great Britain. Here is what it does, how it is set up, what the 2026 review of Ofgem proposes and what it means for suppliers and networks.
By Christopher Fagan, Managing Partner, PEF Consulting Partners
Ofgem stands for the Office of Gas and Electricity Markets. It is the office of the Gas and Electricity Markets Authority, GEMA, which was created by the Utilities Act 2000. Ofgem is a non ministerial government department and covers Great Britain; Northern Ireland has its own regulator, the Utility Regulator.
Its principal objective is to protect the interests of existing and future gas and electricity consumers. Its duties come mainly from the Gas Act 1986 and the Electricity Act 1989, as amended.
| Area | What it covers |
|---|---|
| Licensing | Licences for suppliers, network companies, generators and others, and the conditions they must meet |
| The price cap | The default tariff cap for households on standard variable and default tariffs |
| Network price controls | The RIIO price controls for transmission and distribution, with RIIO 3 running from April 2026 |
| Industry codes | Governance of the industry codes, being reformed under the Energy Act 2023 |
| Compliance and enforcement | Investigations, fines and redress for breaches of licences and rules |
| Government schemes | Administering around a dozen schemes, such as ECO4, the Warm Home Discount and the Smart Export Guarantee |
| Heat networks | Regulating heat networks since January 2026 |
The government launched a review of Ofgem in December 2024 and published its final report on 22 April 2026. It proposes three equal objectives covering consumers, net zero and growth; a strategy and policy statement specific to Ofgem; stronger enforcement, including the power to enforce consumer law directly, individual accountability for senior managers and higher penalties; enforceable Energy Ombudsman decisions; and moving some scheme delivery to a new Warm Homes Agency. Most of this needs legislation, and an Energy Independence Bill covering Ofgem’s remit and powers was announced in the King’s Speech in May 2026.
Related reading: Ofgem compliance support, Ofgem back billing rules, energy supplier licence compliance, the free Ofgem compliance readiness check.
They are minimum service standards, set by Ofgem, that require energy suppliers and network operators to pay customers fixed compensation when they miss them, for example for missed appointments, switching problems, late final bills or long power cuts.
It licenses and regulates energy companies in Great Britain, sets the household price cap and the network price controls, governs industry codes, enforces the rules and runs a number of government schemes.
Ofgem is governed by the Gas and Electricity Markets Authority and is accountable to Parliament. The government sets its strategic priorities through a strategy and policy statement.
It is a non ministerial government department, independent of ministers in its day to day decisions but working within duties set by Parliament.
Ofgem does not resolve individual complaints. Complain to your supplier first; if that does not resolve it, the Energy Ombudsman can, and Citizens Advice can help.
If the shift to outcomes based regulation and tougher enforcement is on your board’s agenda, we can help you test how ready your billing and compliance controls really are.