Exclusive: Ofgem to be given powers to issue fines and rein in bonuses for executives who ‘reward themselves while customers suffer’
Energy bosses in the UK will have their bonuses curtailed when suppliers and brokers break the rules under a crackdown on mis-selling.
Through the energy independence bill, which will be introduced on Wednesday, Ofgem will be given new powers to order compensation, impose fines and ban rogue operators that have pushed businesses and households into overpriced contracts.
Companies with a business energy supply contract often use a broker to secure their deal, but – unlike the intermediaries who market mortgages or insurance deals – these energy middlemen are largely unregulated.
The government said rogue brokers had been able to push small businesses into overpriced energy contracts while pocketing hidden commissions, leaving companies paying more than they should.
These energy brokers and price comparison services will now be brought under Ofgem’s remit. The move is expected to save businesses more than £100m a year from hidden commissions and mis-selling.
The watchdog will also be given powers to crack down on payments to bosses who have “rewarded themselves while customers suffer”.
It follows public outrage over huge bonus payouts to executives despite investigations into the treatment of vulnerable customers.
The energy secretary, Miatta Fahnbulleh, said: “People work hard for their money. They shouldn’t be ripped off by energy companies or forced to fight for fair treatment when things go wrong.
“When energy bosses fail their customers, they shouldn’t be walking away with bumper bonuses while families and businesses pick up the bill.”
The bill, which was announced in the king’s speech and is expected to set out more details on the government’s plans to transition to clean energy, comes as ministers face criticism over the green agenda.
John Healey recently unveiled more than £3bn of cuts to the energy department’s budget, much of which will pay for higher defence spending.
The chancellor also said he would veto new offshore wind projects if they did not lower bills, adding to concerns that the government was moving away from the pro-renewables agenda. However, the government says it is still committed to its target of clean power by 2030.
As part of the new bill, local authorities will be given stronger powers to tackle landlords who fail to meet energy efficiency standards, including fines of up to £30,000.
Since 2020, it has been illegal to let properties with energy performance certificate ratings below E, unless the landlord can show that it is exempt.
The government will also use the bill to introduce a moratorium on fracking by ending new licensing onshore in England. Fracking, which involves pumping liquid underground at high pressure to crack rock and release trapped oil or gas, is controversial because of its links to earthquakes and fears it could contaminate the water table.
It was banned by the Conservative government in 2019. However, in 2022, Liz Truss used her brief tenure as prime minister to overturn the ban, prompting widespread anger.
The minister for climate transition, Katie White, said the government was “putting communities first and protecting them from the risks of earthquakes and unsafe drilling”.
The moratorium will not include lower-volume fracking operations or “proppant squeeze”, which the fracking industry says is not a form of fracking. However, Tony Bosworth, an energy campaigner at Friends of the Earth, said this was an attempt to “creep in through the back door under a different name”.
The government said the low-volume activities were not under the scope of the ban and it was not aware of evidence that they posed the same risks as high-volume fracking.
Prof Stuart Haszeldine of the University of Edinburgh has said that earthquakes caused by lower-volume fracking can be as large and unpredictable as those caused by high-volume fracking.
