Regulation of the Gas and Electricity Industry


The Gas Act 1986 created the Office of Gas Supply (OFGAS), the independent Government watchdog for the gas industry, to secure that all reasonable demands for gas were met, to secure effective competition in the gas industry and to protect consumers both in terms of prices and in terms of the quality of services. The Office of Electricity Regulation (OFFER) had a similar role to play with regard to the supply of electricity.

As a result of the ever closer interaction between gas and electricity companies, OFGEM (the Office of the Gas and Electricity Markets)was formed in June 1999 and now regulates the gas and electricity industry in England, Scotland and Wales. In Northern Ireland responsibility lies with the Office for the Regulation of Electricity and Gas (OFREG).

OFGEM's aim is to bring choice and value to all gas and electricity customers by promoting competition and regulating monopolies and everything that OFGEM does is designed to promote and protect the interests of gas and electricity customers. It does this by attempting to create conditions which allow companies to compete fairly, and which enable customers to make an informed choice between suppliers. It also licences and monitors the gas and electricity companies and takes action where necessary to ensure compliance.

OFGEM's main tasks are to:

Promote competition in all parts of the gas and electricity industries by creating the conditions which allow companies to compete fairly and which enable customers to make an informed choice between suppliers; and

Regulate areas of the gas and electricity industries where competition is not effective by setting price controls and standards to ensure customers get value for money and a reliable service.

OFGEM is governed by the Gas and Electricity Markets Authority and its powers are provided for under the Gas Act 1986, the Electricity Act 1989 and the Utilities Act 2000. The Authority determines strategy and decides on major policy issues. It is made up of non-executive and executive members. The Authority may regulate its own procedures and has adopted Rules of Procedure to provide for this.

Competition in Supply

The substantive provisions of the Competition Act 1998 (the Act) came into force on 1 March 2000 and OFGEM, together with the Office of Fair Trading, will enforce the Chapter I and II prohibitions. Chapter I prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices...

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