Ofgem confirms strengthened milestone assessments

Ofgem has confirmed it will introduce new licence conditions allowing it to pause energy suppliers’ ability take on new customers when certain milestones are reached.

The decision, published on Friday (4 February), is part of the regulator’s wider plans to strengthen market resilience in the wake of soaring wholesale costs.

Since January 2021, suppliers have been subject to assessments when they reach 50,000 and 200,000 domestic customers. In December, the regulator consulted on requiring retailers to pause domestic customer onboarding when they reach the thresholds while it conducts any necessary assessment.

In its decision document, Ofgem clarified that suppliers who are “proactive and constructive” in their engagement with the process may not have their growth paused.

“Where a supplier approaches us proactively and provides us with clear and accurate information ahead of reaching a threshold, we will be best placed to undertake any assessment without the need for customer onboarding to be paused, or for any pause to be minimised,” the regulator explained.

For those suppliers undergoing an assessment, Ofgem said that provided they fully and accurately complete the milestone assessment template and provide any additional information requested in a timely manner, the process will take up to 40 working days.

The regulator has further published its decision on strengthening reporting requirements on senior personnel changes, as well as those regarding significant commercial developments, such as trade sales.

It has set out a defined period of 40 working days for suppliers to notify of any significant developments and 20 working days to notify of any senior personnel appointments.

“We believe that specifying more clearly when these notifications must be made will provide clarity for suppliers and avoid ambiguity when it comes to compliance with these important provisions,” it said.

As with the milestone assessments, Ofgem clarified that proactive and constructive engagement by suppliers may in some cases negate the need for commercial developments to be paused while it undertakes an assessment.

Similarly, retailers will be required to submit a simple employee checklist alongside their notification of a prospective senior personnel change. Where this does not identify the person as bearing any of the risk factors listed in the checklist, such as previously having held a senior position at a failed supplier, the assessment will be waived.

The amended licence conditions will take effect from 1 April, the date when the summer price cap period will commence.

The future shape of the energy retail market and the relationship with consumers will be a key part of the debate at Utility Week’s Customer Summit on 16 & 17 March. Find out more here.