More regulations to protect non-domestic energy customers are on the way, thanks to some recent changes introduced by the Department for Energy Security and Net Zero (DESNZ) and the energy regulator Ofgem.
Under the Non-Domestic Market Review, the main targets are smaller businesses, who will now have their own defined customer category and will benefit from some of the same rights that microbusinesses are entitled to.
Energy brokers – or third-party intermediaries (TPIs) – are also to be impacted, with tighter regulations and mandatory accreditation being introduced for the current voluntary Code of Practice. Energy-related ‘Change of Tenancy’ processes are also under review.
New ‘Small Business Consumer’ classification
A new business category – the ‘Small Business Consumer’ – is being introduced to offer the same standards around complaint handling that currently exist for microbusiness customers.
Ofgem defines a Small Business Consumer as any organisation that:
From December 2024, the intention is that these businesses will benefit from:
Microbusinesses already qualify for these measures, and also will benefit from mandatory signposting to Citizens Advice by their supplier from July 2024.
According to DESNZ, the Microbusiness and new Small Business Consumer categories will together cover around 99% of the non-domestic market.
The introduction of these measures is contingent on secondary legislation being passed. But we don’t anticipate any issues with this following the General Election.
New measures for all businesses
Alongside the new measures for smaller businesses, from July 2024 the industry’s Standards of Conduct will apply to all customers (currently, they only apply to microbusinesses).
Furthermore, the TPI Commission Transparency requirement will be extended from Microbusinesses to all customers from October 2024.
This means that any consumer using an energy broker will have fully visibility of any commission-related uplift through their quote documents. This could be shown either as an uplift against the unit rate or the standing charge.
Code of Practice and accreditation for TPIs
A voluntary Code of Practice (CoP) for TPIs that was introduced last October is now set to become mandatory.
This CoP was created by the Retail Energy Code Company (RECCo), which is an Ofgem-created body to set up and oversee rules for operating in the retail energy sector, and it covers:
The RECCo is now planning to introduce a new mandatory accreditation process that would mean suppliers could only work with TPIs who adhere to the CoP.
Accreditation would be overseen by a new scheme administrator, with the actual accreditation process carried out by the administrator or suppliers.
In terms of timing, we are expecting a decision from Ofgem with final details in Q3 this year, with these measures then likely implemented in 2025/26.
Change of Tenancy process to be made easier
Also in focus for new regulations is the Change of Tenancy process, where businesses change supplier due to moving premises.
This area is fraught with inconsistencies across the market, with bad practice, failures and delays common. For example, new suppliers accepting a Change of Tenancy without relevant evidence, or an increase in transfers being blocked on ‘grounds of debt’.
As a result, Ofgem is exploring ways to regulate this process to make it clearer and more consistent.
We haven’t been given timings on this yet, but expect to hear something later this year, so will keep you updated.
If you have questions on any of the issues outlined, please contact your Client Lead or Account Manager.