Ofgem Market Review: Energy Suppliers to Disclose Third-Party Costs

New requirements will oblige suppliers to disclose third-party costs paid to any non-domestic energy consultants. Find out more below:

Earlier in the year LGE reported on the publication of the outcomes from Ofgem’s consultations on non-domestic energy policy.  The review was part of Ofgem’s efforts to create fairer treatment for all non-domestic customers through deploying greater support and improved transparency. As part of this review, Ofgem was to determine whether energy suppliers should disclose their costs paid to third parties such as energy brokers/intermediaries. It was decided by Ofgem that any contracts signed from the 1st October 2024 onwards must do this and disclose all costs paid by suppliers.

How will the change work?

  • This new requirement will apply to all customers irrespective of size and the costs will be provided within contractual principal terms and when requested by customers.
  • The charges will be displayed as a pence/kWh format.
  • The obligation to disclose third-party costs to microbusiness customers will not be impacted by this change.

As the date approaches, suppliers are now preparing to ensure that their principal contract terms detail the commissions paid to third-party intermediaries. Alongside policies such as expanding the Ofgem standards of conduct to businesses of all sizes, the move will help the regulator ensure that suppliers are treating non-domestic customers fairly.

LGE’s view:

As an early adopter of Ofgem’s proposals for transparency in 2014, LGE welcomes all reviews and policies which further solidify transparency in the non-domestic energy sector. All clients at LGE are offered full transparency on utility cost make up as standard contractual practice. Whilst this may seem an obvious requirement, it is a rarity in the industry, with many consultancies accepting additional commissions from suppliers in exchange for exclusive relationships. It is for this reason that LGE welcomes policy moves by Ofgem that will enforce LGE’s practices as industry standard. LGE looks forward to working with Ofgem, suppliers and clients to ensure that the journey to greater transparency is as smooth as possible.