a reform package – mostly requiring primary legislation - designed to ensure the energy regulator remains fit for purpose through the net zero transition.
The proposals include a simplification of Ofgem’s statutory duties. Since 2000, these have included an overriding principal objective to protect the interests of existing and future consumers, sitting alongside various primary and secondary duties added over the years. The concern is that these duties are frequently conflicting, with the overriding objective tending to encourage decisions focussed around driving down consumer bills, which can defer necessary investment and lead to higher costs over the long term.
A reformed structure will see three principal objectives of equal status - protecting existing and future consumers, facilitating net zero, and promoting economic growth. This structure will incorporate other technical changes designed to avoid the need for primary legislation each time new areas of regulation are brought within Ofgem’s remit.
Notably, Ofgem will get a significant expansion of its enforcement powers, reflecting recent reforms of the CMA and FCA. Measures include power in certain cases to look beyond the licensed entity and enforce against interconnected companies (including foreign parent companies), as well as powers to direct clawback of executive remuneration. Ofgem would also be enabled to enforce certain consumer law directly, without having to seek enforcement orders through the courts.
A more detailed analysis of the proposals will appear on our website shortly.
We also saw in March 2026 the latest set of decisions from Ofgem on energy code reform, a substantial programme of governance reform jointly undertaken by Ofgem and government and enabled under the Energy Act 2023. These codes are crucial to the functioning of the energy industry, setting out the rules for such things as how to connect to the electricity and gas networks, through to how consumers switch suppliers and who can access consumption data.
Key measures include empowering independent code managers, strengthening strategic direction and improving change processes, as well as consolidation and simplification of the codes. Crucially, code managers will be licensed by Ofgem and tasked with leading code modifications and ensuring codes develop in line with Ofgem’s annual strategic direction statement. Industry experts will help shape code modifications through new stakeholder advisory forums (SAFs).
This latest publication makes a number of decisions on the detailed framework, especially around the SAFs, as well as consulting on other areas notably template code text for the new modification process and the SAFs.
When considered alongside the fundamental reforms underway in the water sector following the Cunliffe Report, which will see Ofwat replaced by a “super-regulator”, these changes clearly illustrate just how much the regulatory frameworks put in place decades ago with the utility privatisations have largely run their course and need an overhaul to remain fit for purpose.
Against the backdrop of impending regulatory and governance change, our team has continued to work with our clients across the energy transition arena. After the uncertainty leading up to last year’s Autumn Budget, including the impact of the connection queue transition process, it’s been encouraging to see more renewables projects now moving forward. And we are seeing, from our work for both developers and supplier off-takers, that corporate appetite for PPAs remains strong.
