Energy UK has called for Britain’s energy regulator Ofgem to shed some of its responsibilities and focus more tightly on its core functions, arguing that the organisation has become “too big and bureaucratic” amid rising costs and expanding duties.
The trade association’s comments come as the Department for Energy Security and Net Zero (DESNZ) carries out a formal review of Ofgem’s role. In a paper published on Tuesday, Energy UK said Ofgem’s headcount has increased by 120% and its budget has doubled, far outpacing the energy industry’s 8% workforce growth.
“Systemic regulatory failures have left customers on the hook for billions of extra costs and a massive increase in red tape is holding back investment at precisely the time we need it most,” said Dhara Vyas, Chief Executive of Energy UK.
“It’s vital that a sector as important as energy has an effective regulator both for those companies it oversees and the customers they serve,” she added. Vyas described the government’s ongoing review as “an ideal opportunity to reset energy regulation with a new structure that enables effective oversight of a fast moving and rapidly developing sector.”
In response, Ofgem said it was committed to working with industry to “cut red tape and back investment” while maintaining firm regulatory oversight to protect consumers.
A spokesperson for Ofgem said: “We will continue to work closely with the industry, Energy UK, and consumer groups as the energy system evolves, and the Ofgem review is an important opportunity to ensure regulation and our remit keeps pace with change.
“No matter how you arrange the institutions – a strong, independent energy regulator will always be essential,” the spokesperson added, noting that consumer satisfaction had risen to record highs after falling to 66% in 2022, and that suppliers now hold £7.5 billion in assets, compared with heavy debts during the energy crisis.
Ofgem also said it was ready to help “unlock £80 billion of investment in the system with clear oversight, moving quickly as needed.”
The review’s findings are expected to shape the future structure of energy regulation in the UK as the sector transitions toward decarbonisation and greater system resilience.
