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Ofgem has outlined plans to reform the way the domestic electricity and gas markets are regulated in a move towards more principles-based regulation over the next year.
In an open letter published yesterday (2 June), the regulator sets out the “key milestones for 2016/17” including aims for when a significant amount of “unnecessary prescription” will be removed from the supply licence and how the operating model, currently used to enforce rules, will be adapted.
The letter follows a consultation in December which discussed ambitions to reform the regulatory framework that applies to the “rapidly transforming domestic supply market.”
Ofgem said: “To fulfil our role effectively, we need to reduce the amount of prescription we use and increase our reliance on principles.
“If this increased reliance on principles is to result in suppliers taking responsibility for treating consumers fairly, it is vital that we also adapt the way we operate as a regulator.”
The reforms come ahead of the publication of final remedies from the Competition and Markets Authority (CMA) investigation into the energy market, which included the removal of Ofgem’s ‘simpler choices rule’ as part of the Retail Market Reform (RMR).
Ofgem have committed to publishing a statutory consultation on principles in line with the CMA provisional recommendations on RMR and a policy consultation on broad principles to be included at the front of the restructured supply licence by the end of 2016.
“We plan to discuss how to best maintain momentum for this reform programme at a senior stakeholder event after the summer,” the regulator added.
The final CMA investigation recommendations are expected at the end of this month.
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