Ofgem Regulations: What to Expect Over the Next 3 Years?

Ofgem Regulations: What to Expect Over the Next 3 Years

Since the 1st April 2025, the UK’s energy regulator Ofgem has been rolling out a series of significant regulatory changes for heat networks, designed to improve consumer protection and ensure greater financial stability across the energy sector. These updates will affect energy suppliers, building managers, developers and energy consumers.

There are a lot of changes to consider, making it incredibly difficult to keep track of what you need to do, and when you need to do it.

In this blog, we’ll run through what you should expect to change over the next three years as Ofgem’s regulations come into effect.

What should you expect?

1. Heat Network Regulations

We’ve talked in detail about the new Heat Network Regulations over the last few months. It’s a key regulatory shift spearheaded by Ofgem, where the heat network industry which at this moment in time is slackly regulated compared to other sectors. Will be brought into line and carefully monitored.

This marks a major step towards improving protections for consumers currently served by these loosely regulated systems. Operators of both existing and new heat networks will be required to comply with Ofgem, adhering to new standards for technical performance and customer service.

For the first time, consumers will also have formal access to advocacy and redress. Citizens Advice and Consumer Scotland will begin supporting heat network customers from April 2025, while the Energy Ombudsman will be able to resolve disputes.

The full regulatory framework – including rules around pricing and Guaranteed Standards of Performance (GSOPs) – is expected to be in place by January 2027. Suppliers or buildings that fall short of these standards could be required to provide compensation to affected customers, bringing the sector more in line with other regulated utilities.

2. New financial requirements for energy suppliers (from March 2025)

To prevent the kind of supplier collapses that disrupted the energy market in recent years, Ofgem is introducing stricter financial controls. From March 2025, suppliers must meet minimum capital requirements, calculated at £0 adjusted net assets per dual-fuel customer, with a target of £115. This aims to ensure that suppliers can remain solvent even during market shocks.

In addition, energy suppliers must set aside customer credit balances. This means suppliers will no longer be able to use advance payments from customers to fund day-to-day operations. Instead, those funds will be protected and available for refunds or adjustments when needed, further strengthening consumer confidence in the sector.

3. Updates to Guaranteed Standards of Performance (GSOP)

Ofgem is also updating compensation levels paid to customers when network operators fail to meet agreed service standards.

Since April 2025, these payments have been linked to inflation using the Consumer Prices Index Including Housing (CPIH). This ensures that compensation remains fair and reflective of current economic conditions.

4. Price cap adjustments

Finally, Ofgem is adjusting the energy price cap in response to wholesale market changes.

From April 2025, the cap on average dual-fuel usage has increased by 6.4%, rising from £1,738 to £1,849 per year. While this may be unwelcome news for many households, the increase is designed to reflect supplier costs more accurately and help maintain market stability.

Are you prepared for new heat network regulations?

We’re entering a new era of accountability, transparency and consumer protection. Whether you’re a developer, managing agent, housing association, resident management company or anything in between, now is the time to change.

If you wait until 2027, it’ll already be way too late. It’s essential that you assess your readiness and urgently align with emerging compliance standards.

Ready to get going? Get in touch with our specialists today.

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