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Ofgem information for energy licensees on coronavirus (COVID-19) response

Guidance

Publication date: 16 April 2020
Industry sector: Distribution Network; Offshore Transmission Network; Supply and Retail Market; Transmission Network; Generation and Wholesale Market
Scheme name: CCL; Domestic RHI; ECO; FIT; GER; Non-Domestic RHI; REGO; RO; SEG; WHD

Page history

First published: 16 April 2020
Last updated: 16 April 2020

This page has been replaced by a newer version. Go to our June 2020 priorities update

Our immediate priorities

We are focused on ensuring that the energy industry can effectively respond to the coronavirus (COVID-19) crisis. Our priority is to protect consumers, especially vulnerable people, and to maintain Britain’s supply of electricity and gas. Here we explain how we are focusing our activities on the most time-critical work we carry out for consumers.

We are prioritising work on our response to the crisis. We are working closely and collaboratively with government, the energy industry, consumer organisations and other stakeholders to ensure that we can meet this overarching objective.

We will also deliver our statutory obligations and progress time-critical work, being mindful of stakeholder capacity to engage.

We will continue to update this page with information for licensees, and will assess and adapt our approach as the situation develops.

Until 30 June, we will prioritise work in the areas listed below. We will reassess these regularly and will update activities where needed.

Area	Activities
Retail energy markets	Adjust the levels of the Default Tariff and Prepayment Meter energy price caps to reflect the estimated costs of supplying electricity and gas to homes in the next price cap period. Complete required changes to the smart meter allowance and wholesale costs adjustment in the Default Tariff Energy Price Cap methodology. Progress work to ensure there is a suitable replacement for the current Prepayment Meter Energy Price Cap, which is due to end by the end of 2020. Undertake our first review into whether conditions are in place for effective competition in domestic supply contracts as set out in Section 7 of the Domestic Gas and Electricity (Tariff Cap) Act 2018, incorporating understanding of the implications of the coronavirus (COVID-19) into our analysis. Implementing the Data Communications Company price control. Consult and publish decisions on levy claims from suppliers who have incurred additional costs from acting as a supplier of last resort. Continue critical retail market monitoring, including on suppliers’ finances, customer service and the experience of prepayment meter and vulnerable customers through the coronavirus (COVID-19) crisis.
Wholesale energy markets	Consult on the Capacity Market Rules policy, giving industry additional time to respond. Implementation of a Capacity Market Advisory Group is delayed until further notice. Decisions on cross-border market arrangements and some code and licence modifications. These may run to a slower timeline than usual. Continue critical wholesale market monitoring, maintaining a specific focus on market liquidity.
Energy systems & networks	Implementing the existing RIIO-1 network price controls, reducing regulatory burden where it is sensible to do so. Implementing the Electricity System Operator incentives. Managing ongoing Offshore Transmission Owner (OFTO) tenders and related activities. Progressing new interconnectors in development, and related cost-assessments.
Government environmental & social programmes	Ongoing administration of Government environmental & social programmes
Cross-cutting	All obligated licensing activities. Ongoing compliance, investigation and enforcement activity, ensuring appropriate timelines for relevant parties to engage. We may adjust some enforcement timelines where appropriate. We stand ready to take urgent enforcement action where we identify consumer harm. We will continue to engage with industry code bodies and panels, and seek to make timely decisions on the most urgent code modifications. Ongoing cyber security obligations. Engagement on the Government Clean Energy Package. EU engagement on future partnership arrangements.

Over the coming weeks, we will continue to engage stakeholders to understand how we can best progress work on the activities outlined below.

Area	Activities
Retail energy markets	Supplier Licensing Review statutory consultation on ongoing monitoring and market exit proposals. We consider this to be an important area of work to progress as quickly as possible, but we will delay this until at least May 2020 and will keep publication under review until we consider stakeholders have the capacity to engage. Consultation on the Data Communications Company (DCC) Operational Performance Regime, to be published in May. Due to the timescales of the annual DCC price control, if this work were to be paused it would delay implementation of an improved regime from April 2021 until April 2022.
Energy systems & networks	RIIO-2 network price control determinations for the transmission and gas distribution sectors and the Electricity System Operator (ESO). RIIO-2 network price control sector methodology phase for electricity distribution. Targeted Charging Review. We have already delayed the implementation date for Transmission Demand Residual changes from 2021 to 2022. We continue to engage with industry on how to ensure the ongoing process minimises the burden on stakeholders over the next three months. Access and Forward Looking Charges Review and key developments in flexibility markets. We expect industry to make every effort to engage, both in their own development work in these areas and with us in our work. Where this is not possible, we intend to progress these activities internally, engaging more extensively when appropriate to do so. The consultation on the modification to implement the Gas Charging Review (UNC678) closed in February and we will be setting out the way forward on this in the near future.

Area

Activities

Retail energy markets

Supplier Licensing Review statutory consultation on ongoing monitoring and market exit proposals. We consider this to be an important area of work to progress as quickly as possible, but we will delay this until at least May 2020 and will keep publication under review until we consider stakeholders have the capacity to engage.
Consultation on the Data Communications Company (DCC) Operational Performance Regime, to be published in May. Due to the timescales of the annual DCC price control, if this work were to be paused it would delay implementation of an improved regime from April 2021 until April 2022.

Energy systems & networks

RIIO-2 network price control determinations for the transmission and gas distribution sectors and the Electricity System Operator (ESO).
RIIO-2 network price control sector methodology phase for electricity distribution.
Targeted Charging Review. We have already delayed the implementation date for Transmission Demand Residual changes from 2021 to 2022. We continue to engage with industry on how to ensure the ongoing process minimises the burden on stakeholders over the next three months.
Access and Forward Looking Charges Review and key developments in flexibility markets. We expect industry to make every effort to engage, both in their own development work in these areas and with us in our work. Where this is not possible, we intend to progress these activities internally, engaging more extensively when appropriate to do so.
The consultation on the modification to implement the Gas Charging Review (UNC678) closed in February and we will be setting out the way forward on this in the near future.

We are delaying or postponing a range of activities that we consider less time-critical in the short-term to consumer protection and security of supply. This is to enable stakeholders and Ofgem to prioritise response to the coronavirus (COVID-19) crisis, and focus time and resource to supporting customers and the market during this difficult period.

Where possible, and only where we are confident that it won’t impede our own response to the crisis, we may continue to pursue internal work, including to implement our decarbonisation action plan. This will enable us to make progress as quickly as possible once the immediate crisis has passed, and when industry and other stakeholders have sufficient capacity to engage.

The following table sets out a number of planned projects where publication was due in Spring 2020 but where we have now decided to postpone publication to the dates shown in the table. We will regularly review these plans.

Area	Activity	Revised publication date
Retail energy markets	Settlement Reform: Consultation on market-wide half-hourly settlement and draft impact assessment, with accompanying open letter providing clarification on data access – to be published for information, with response date to follow in due course.	30 April 2020
	Consumer vulnerability strategy: Statutory consultation on proposals to reduce self-disconnections	TBC June 2020
	Micro-business review: Policy consultation on proposals to improve operation of microbusiness market	TBC June 2020
	Barriers to retail market innovation: Policy consultation on expanding scope of derogations from supply licence conditions	TBC June 2020 or later
	Smart meter rollout: Open letter on supplier performance in 2019 and priorities in 2020	TBC June 2020 or later
	Supplier licensing review: Policy consultation on cost mutualisation	TBC june 2020 or later
Wholesale energy markets	Capacity Market: Capacity Market Advisory Group policy consultation	TBC June 2020 or later
Wholesale energy markets	Gas wholesale market: Decision on the proposed change to existing arrangements for accessing licence baseline exit capacity on the National Transmission System at Bacton Interconnection Point	TBC June 2020 or later
Energy systems & networks	Distribution System Operator & whole system: Decision on whole electricity system licence condition	TBC June 2020 or later
	Governance framework for system operation review	TBC June 2020 or later
	RIIO-2 price control: First informal consultation on RIIO-2 licence modifications First informal consultation on net zero reopener	TBC June 2020 or later
Licensing, codes & standards	Retail Energy Codes: Consultation on REC v1.1 Consultation on licence changes Consultation on REC main body, schedules and technical specification documents	TBC June 2020 or later

Regulatory implications by sector
The following is a non-exhaustive summary of key regulatory implications, including relating to some industry programmes.

We expect licensees to prioritise customer and staff safety and will be pragmatic in our approach to compliance during this period. Licensees should not be afraid to do the right thing for their customers.

Jump to:
Retail energy markets
We expect suppliers to continue their regulatory reporting, to ensure we have a clear picture of the market during this period.

We have asked suppliers to respond to a new mandatory information request to help us manage the crisis.

Recognising the circumstances, we have extended supplier reporting on a number of requests for information. The following will now be due in July 2020, although we expect this to include all data since the last reporting period:

social obligations reporting

complaints data reporting

guaranteed standards of performance reporting.
Suppliers are obligated by Government to ‘take all reasonable steps’ to deliver the smart meter rollout by the end of 2020.

Within that, we have advised suppliers to:

follow government guidance on coronavirus (COVID-19)

adopt appropriate measures to protect their customers and staff.

We have issued guidance outlining the minimum steps that suppliers should be taking to minimise risk of exposure during installations, and confirmed that suppliers may temporarily deprioritise non-essential installations. Suppliers are expected to focus particularly on the wellbeing of their vulnerable customers and on customers at risk of going off supply.

In response to the implementation of the most recent social distancing measures:

Energy UK has announced that its members will halt ‘all non-essential field activities’

Major suppliers have indicated that only emergency installations will go ahead.

We expect suppliers to keep this reduction in activity under active review, taking into account the latest government guidance on coronavirus (COVID-19).

Links to Government guidelines and Industry-led commitments
On 31 March, the Switching Delivery Group decided to delay entry to to User Entry Process Testing (UEPT). UEPT is the first testing stage that suppliers must complete within six months. The decision means suppliers can suspend testing preparation during the national crisis.

The programme is working on a revised delivery plan. We will agree the revised plan through usual programme governance so that any preparation activites that programme stakeholders can deliver is completed in the most cost-effective way.

The programme and its representatives will ensure all programme stakeholders are kept up to date.

Wholesale energy markets

The wholesale energy market is playing a key role in delivering secure supplies of energy for consumers during this difficult time.

Market participants should raise any issues that cause security of supply concerns with the Department for Business, Energy & Industrial Strategy, the System Operators and Ofgem. To contact Ofgem on these issues, email: COVID19@ofgem.gov.uk.

As usual, we expect gas and electricity market participants to alert us to any risks of significant compliance failures or actual non-compliance, if and when they arise, at the first opportunity.

Participants should be able to set out why they feel you are unable to comply and what alternative or contingency steps they have taken to deliver your obligations to the best of their ability.

We will consider any such circumstance in its context, including any official Government advice and logistical challenges outside of their control (such as staffing availability and supply chain dependencies).
REMIT is an EU regulation on energy market integrity and transparency (No 1227/2011).

We take any breach of REMIT prohibitions and obligations extremely seriously. We would view any attempt to take advantage of a national emergency as a serious aggravating factor.

Following Government advice on coronavirus (COVID-19) measures, we understand that many market participants will have implemented working from home arrangements. REMIT continues to apply regardless of working arrangements.

In the case where working from home arrangements impose technical limitations on trading supervision and the broader control environment, we expect market participants to consider what steps they could take to mitigate outstanding risks. This could include, for example:

enhanced monitoring, or

retrospective review once the situation has been resolved.

If market participants have concerns about REMIT compliance during this time they should contact us at REMIT@ofgem.gov.uk

Where any issues are due to the coronavirus (COVID-19) situation, we will take this fully into account.

We continue to review the situation, and monitor for market abuse. We will take action where necessary.
Energy systems & networks
Our overarching objectives in working with network companies throughout the coronavirus (COVID-19) national crisis are to:

ensure that consumer needs are met, particularly the needs of people in vulnerable situations.

maintain secure, reliable and safe supplies of energy to GB consumers in the short to medium-term (i.e. through to the end of next winter).

ensure the safety and protection of consumers and industry workforce.

On 8 April, we published a framework on regulatory flexibility. It outlines our expectations on network companies for what is high priority now and must be delivered, and what can be deprioritised if necessary. The framework explains our pragmatic approach to compliance activity related to core, ongoing customer-facing aspects of network activity.

We will continue to ensure our approach to the wider regulatory programme for the energy networks, including the ongoing monitoring and delivery of the existing RIIO-1 network price controls, remains consistent with these overarching objectives.

Assuming there is no change in circumstances, this framework will remain in place until 30 June 2020. As we approach that time, we will review the case for extending and/or amending it, based on circumstances at the time of review.

8 April: Letter to network companies
We expect system operators:

to be ensuring the secure and reliable operation of the electricity and gas systems as their first priority, and

to continue to deliver their critical core functions in line with their licence, and

in the case of the Electricity System Operator, deliver its Forward Plan.

Given the new challenges posed by the coronavirus (COVID-19), we want to have early sight on potential risks to the system and any impact on the system operators’ ability to effectively deliver any obligations or deliverables.

We will then work with the system operators to provide clarity on our views, recognising the enabling framework provided to network companies on 8 April.
Government environmental & social programmes
Where licensees are obligated under the government schemes we deliver, we expect that they will look to meet their obligations. This includes ensuring that they will be able to meet any Feed-in Tariff and Renewables Obligation payments.

We continue to deliver our statutory functions in administering Government environmental and social programmes. We are prioritising areas which have the most impact on participants, such as scheme payments and enquiries, but are unable to pause work or adjust deadlines laid out in the Regulations.

We are working with Government to look at if any changes are appropriate, and can be made.

All work carried out under the programmes:

must follow the latest Government guidelines on going to work and social distancing, including sector-specific guidance.

should be reviewed by suppliers working with their supply chain to understand if it is possible for the activity to continue whilst meeting the requirements of Government advice.

Energy Company Obligation (ECO) work should only be carried out where it is considered 'essential repairs and maintenance' by the tradespeople carrying out the work before it is undertaken, with all activities in line with the latest Government advice, and with access to the property confirmed by the homeowner in advance.

We expect monitoring to continue as part of any installation work, where it does not conflict with the latest Government advice. This is to avoid poor-quality installations which could lead to further issues requiring home visits.

Suppliers concerned that they will not be able to meet monitoring requirements on time, should contact us at eco@ofgem.gov.uk as soon as they can to discuss alternatives.

Links to Government guidelines and Industry-led commitments
Cross-cutting activities

We will continue to operate the Ofgem Innovation Link service, offering support on energy regulation to businesses looking to launch new products, services or business models. But recognising the circumstances, we may take longer than usual to respond to requests for feedback.

We will also delay until July 2020 at the earliest, the launch of the expanded innovation sandbox service.
Resources

Links to Government guidelines and Industry-led commitments

Ofgem information for energy licensees on coronavirus (COVID-19) response

Page history

Our immediate priorities

Statutory obligations and time-critical activities Read more

Stakeholder engagement we will continue Read more

Stakeholder engagement we are delaying or postponing Read more

Regulatory implications by sector

Retail energy markets

Supplier regulatory reporting Read more

Smart meter programme Read more

Switching programme Read more

Wholesale energy markets

Energy generator obligations Read more

REMIT compliance Read more

Energy systems & networks

Network company obligations (transmission and distribution) Read more

System operator obligations Read more

RIIO-1 network price controls Read more

Government environmental & social programmes

Information on delivery of Government environmental and social programmes Read more

Cross-cutting activities

Market entry and innovation support services Read more

Resources