<article><section><p>Energy Law analysis: Ofgem has been reviewing its approach to supplier licensing, with the aim of improving suppliers’ financial resilience and enhancing customer protections. Having consulted on the proposed changes earlier this year, Ofgem confirmed on 26 November 2020 that it would introduce a package of reforms relating to energy suppliers’ ongoing regulatory requirements and arrangements for their exit from the energy supply market. In this analysis, Louise Dalton and Thomas Forman of CMS Cameron McKenna Nabarro Olswang consider the key principles of the package of reforms and what these mean for energy lawyers.</p></section></article><section><section></section></section><h2>Original news</h2><p>Ofgem releases its decision on the new approach to supplier licensing, <a href="https://www.lexisnexis.com/uk/lexispsl/energy/document/412012/linkHandler.faces?psldocinfo=Supplier_Licensing_Review_ongoing_requirements_and_exit_arrangements&ps=null&bct=A&homeCsi=0&A=0.22482118652623895&urlEnc=ISO-8859-1&&remotekey1=DIGEST-CITATION(LNB%20News%2027/11/2020%2015)&remotekey2=All%20Subscribed%20Current%20Awareness%20Sources&dpsi=0S4D&cmd=f:exp&service=QUERY&origdpsi=0S4D" title="References to">LNB News 27/11/2020 15</a>.</p><p><em>The Office of Gas and Electricity Markets (Ofgem) has published its decision regarding the new approach to undertake for supplier licensing. The reforms aim to encourage further responsible risk management, to enhance governance and accountability, and to improve market oversight. It follows two consultations, one undertaken in October 2019 on the requirements for active suppliers and exit arrangement and another one held in August 2020 on Ofgem’s policy proposals. The new requirements are to take effect from 22 January 2020, and the Customer Supply Continuity Plans requirement on 18 March 2021. Views can be submitted until 22 January 2021 on the Financial Responsibility Principle guidance found in the Appendix 3 of the decision.</em></p><h2>What are the key principles of the reforms?</h2><p>These reforms will take effect through changes to electricity and gas supply licence conditions. The changes are intended to promote more responsible risk management, improve governance and accountability, increase Ofgem’s ability to oversee energy supply markets effectively and reduce the cost burden and disruption caused when suppliers exit the market. Guidance has been published to accompany two of the proposals, the Financial Responsibility principles and milestone assessments. Ofgem is also considering further reforms on other aspects of market regulation in 2021. The reforms put forward by Ofgem should be considered together as a package and will function </p>
Source: LexisNexis Purpose Built
Supplier Licensing Review—ongoing requirements and exit arrangements
