How does Ofgem's Non-Domestic Market Review affect businesses?

Trust and transparency should be at the heart of how business energy suppliers interact with their customers. It is something that we take very seriously and are always looking for ways to improve.

This was the purpose behind Ofgem’s Non-Domestic Market Review (NDMR). In February 2023, the energy regulator launched a Call for Input, which invited energy industry stakeholders to give their views on the non-domestic retail energy market to assess whether changes in regulation were needed.

Coming at a time when the huge volatility in the wholesale energy market and the subsequent impact on prices was a core focus for many businesses, the review looked at several areas, including the direct regulation of third party intermediaries (TPIs), greater transparency around TPI commissions, and regulations for suppliers around how they respond to and handle customer complaints.

A policy consultation followed in July 2023, and a statutory consultation in December 2023. Ofgem published its decision on the NDMR in April 2024, where it outlined new and updated rules for energy suppliers. It says that the “outcomes we expect to see from our changes are fairer treatment for all non-domestic customers, better support, and improved transparency to empower customers.”

So, what are the key points for business customers?

In its decision, Ofgem confirmed that the priority areas of regulatory change would be spread over three implementation timeframes. These timeframes are: 

• 1 July 2024: this saw the extension of the Standards of Conduct to apply to all businesses, not just microbusinesses, giving Ofgem the power to take action against energy suppliers that don’t treat customers fairly. This phase also included the introduction of a requirement for suppliers to signpost microbusinesses to Citizens Advice should they have an issue.

• 1 October 2024: this saw the extension of TPI commission transparency beyond microbusinesses to all non-domestic customers. Ofgem requires TPI commissions to be disclosed wherever principal terms are mentioned, for example on quote documents, and upon request, but they do not require this information to be shared on energy invoices. This is designed to help customers clearly understand what energy suppliers are charging, separate to TPI commission, allowing them to make more informed decisions when purchasing energy.

• 19 December 2024: we now have a confirmed date for the final phase, which will see the introduction of a Small Business Consumer (SBC) classification. This will extend the regulated complaints procedure to SBCs, and extend the Citizens Advice signposting introduced for microbusinesses in July to businesses classified as an SBC. It will also see the extension of a requirement for suppliers to only work with TPIs who are registered with a Qualifying Dispute Settlement Scheme (QDSS) from microbusinesses to SBCs.

In addition, when it comes to TPI regulation, following the recommendations in the NDMR, the government recently published a new consultation, ‘Regulating Third-Party Intermediaries (TPIs) in the retail energy market’. It says that it “outlines proposals to regulate TPIs, enhance consumer protection, improve market transparency, and ensure that TPIs contribute positively to the energy sector’s evolution towards cleaner energy. It also considers the establishment of a general authorisation regime for TPIs as the preferred regulatory approach.” The consultation closes on 15 November 2024.

Towards a better energy market for businesses

We have always advocated for more transparency in the energy sector, as it’s vital to maintain trust between us, our customers and the TPIs we work closely with. We also know that the TPIs we work with support this change, with many calling for increased regulation to ensure greater confidence in the sector, so the few ‘bad apples’ don’t tarnish the reputation of the many reputable, responsible and expert TPIs in the market. 

These changes are all about empowering businesses to give them the confidence to make more informed decisions about their energy purchasing strategy. Which we, and many others in the sector, believe can only be a positive thing.