On October 26, 2012, the Office of the Gas and Electricity Markets (Ofgem) published updated proposals for changes to the regulation of the non-domestic electricity and gas retail markets in Great Britain.  The Retail Market Review Proposals (RMR Proposals) are part of Ofgem’s RMR program, which also includes proposals for the domestic markets.

The RMR Proposals follow Ofgem’s initial consultation on proposals for the non-domestic market in November 2011, and its Energy Supply Markets Probe in 2008.  Since the initial consultation, Ofgem has been conducting further research, gathering relevant information from suppliers and considering the responses to the initial consultation.

The principal RMR Proposals are:

  • Increased protection for small business consumers – condition 7A of the standard conditions of electricity and gas supply licences (SLC) currently provides protection for micro business consumers when dealing with suppliers.  Ofgem is proposing to expand the number of small business consumers who have the benefit of those protections, by introducing a new definition of small business consumer.  The new definition is intended to capture existing micro business consumers, as well as a wider category of consumers whose annual consumption of electricity and gas is equal to or less than the relevant threshold (100,000 kWh per annum for electricity and 293,000 kWh per annum for gas).  Ofgem also proposes to introduce additional protections, including an obligation to include contract end dates and related notice periods on customer bills.
  • Introduction of binding standards of conduct when dealing with small business consumers – suppliers will, by way of a new SLC 7B, be required to comply with standards of conduct when engaging in the designated activities of billing, contracting and customer transfers with small business consumers.  The overarching objective of the standards of conduct, which will be expressly stated in SLC 7B, is to ensure that each small business consumer is treated fairly.  The standards of conduct include an obligation on the licensee to carry out the designated activities “in a Fair, honest, transparent, appropriate and professional manner.”  Ofgem has indicated that it will give guidance on the meaning of at least some of those terms. 
  • Development of a common code of conduct for third party intermediaries (TPI) – Ofgem proposes to develop options for a common code of conduct for TPIs, who broker contracts between non-domestic consumers and suppliers.  It will also conduct a wider review of the regulatory framework applicable to TPIs, including considering whether more direct regulation by Ofgem (in addition to the code of conduct) is needed.
  • Continuing monitoring of suppliers’ compliance with the customer transfer process – Ofgem proposes to increase its level of monitoring of suppliers’ compliance with the customer transfer objection requirements set out in SLC 14.  No changes to the SLCs are proposed at this stage.

Ofgem intends to publish an issues paper on the TPI regulatory framework review in the first half of 2013. It proposes to introduce the new protections for small business consumers (the first two items in the list above) on a phased basis, from summer 2013 and by winter 2013.

The deadline for responses to the RMR Proposals is December 21, 2012.