Ofgem Bosses Face Bonus Ban Over Consumer Harm

Britain's energy regulator, Ofgem, will soon be empowered to prevent executives from receiving bonuses if they are found to have caused 'significant harm' to consumers. This significant reform, detailed in a government review published on Wednesday, will allow the watchdog to claw back bonuses or block their award in cases of serious misconduct.

The new powers, to be introduced through future legislation, are designed to bolster consumer protection within the energy sector. 'Significant harm' could encompass issues such as overcharging customers. In severe instances, the regulator may also gain the authority to block appointments to senior roles in energy companies.

This move mirrors recent changes granted to the water regulator, Ofwat. While customer satisfaction with energy suppliers is reportedly at record highs, Ofgem has faced scrutiny over past issues. These include the forcible installation of pre-payment meters by British Gas and breaches of licence conditions by companies like National Grid.

Ministers launched the review of Ofgem in December 2024, following the energy sector crisis of late 2021 and early 2022, which saw numerous suppliers go out of business. The regulator was criticized for its handling of that crisis. Trade body Energy UK has suggested these reforms may not go far enough, arguing the issue lies in how Ofgem has utilized its existing powers.