Legal background
- The supply of electricity and gas is a licensed activity under the Electricity Act 1989 and the Gas Act 1986. This Act contains stand-alone duties on Ofgem to modify the standard supply licence conditions to impose a cap on the rates that energy suppliers can charge their domestic customers who are on standard variable or default tariffs. The provisions also provide Ofgem with a power to modify those conditions to enable Ofgem to implement the cap.
- This Act follows a review from 2014 to 2016 of the energy market by the Competition and Market’s Authority (CMA) and an order made by the CMA to place a restriction on the amount that can be charged to customers on a prepayment meter.1
- On 7 December 2017, Ofgem decided to modify the standard supply licence conditions by inserting new standard condition 28AA to regulate charges for a wider group of vulnerable domestic customers. This had the effect of extending the scope of the existing prepayment meter cap to around one million further consumers who were also on their suppliers default tariff.
