Policy and Regulation Insights
INSIGHTS
Staying ahead of policy and regulation
Staying ahead of policy and regulation is crucial in the energy and utilities sector, directly impacting how suppliers operate and engage with customers. As Ofgem continues to refine the price cap, energy providers face persistent challenges in balancing regulatory compliance with financial sustainability.
At BFY, we bring extensive experience in managing regulatory change, having worked with 75% of the energy retail market before, during, and after the energy crisis. Our insights offer valuable guidance and address key questions, including:
- How are the latest changes to the price cap affecting suppliers and the wider energy market?
- What strategies can energy providers implement to balance regulatory compliance with financial stability?
- How can suppliers future-proof their operations in response to evolving policy and regulatory demands in the energy sector?
Insights
Policy and Regulation
Price Cap to rise by £35 (2%) to £1,755 in October - higher than expected ahead of winter
Ofgem has today confirmed that the Price Cap will increase by £35 (2%) to £1,755 in October - rising slightly more than expected as we head into winter. This small change reflects a more stable wholesale market, with the increase driven by higher balancing costs and the expansion of the Warm Home Discount, which will support up to 2.7m more households.
RIIO-ED3: Gearing up for the next electricity distribution price control period
RIIO-ED3 is the third round of Ofgem's performance-based price control framework, covering the 2028-2033 period. It comes at a pivotal time, as the UK pushes forward on its path to Net Zero by 2050 and targets the Government’s Clean Power 2030 ambition.
Spending Review: What £40bn green investment means for the energy sector
Chancellor Rachel Reeves has set out the government’s spending plans through to the next election. Despite early doubts, energy emerged as one of the biggest winners. See what it means for the sector here.
July Price Cap to fall by £129 to £1,720 – relief for customers on default tariffs
Ofgem have announced the first reduction in the Price Cap in a year, falling by £129 (7%) in July to £1,720. While this offers some relief, typical households are set to save just £30 over 12 months, and bills remain 50% above pre-crisis levels.
Heat Network Regulation: Action plan for future market leaders
In part two of our Heat Network Regulation article, we turn to the important question of what those in the sector should be doing right now to prepare. This is both an opportunity and a risk for heat network suppliers. Those who can get it right will stand to win from the coming growth in the market. Those who get it wrong will find themselves exposed, and eventually, risk exiting the market.
Heat Network Regulation: The compliance countdown that will define future players
In January 2026, the UK heat network sector faces a huge transformation. As Ofgem takes regulatory control, suppliers face a stark choice: adapt quickly to thrive in a growing market or risk business failure under unprecedented scrutiny. With less than nine months to prepare, the clock is ticking - and many suppliers remain dangerously unprepared.
April Price Cap rises to £1,849 – tariff changes planned, and billing pressure grows
Ofgem have today announced the energy Price Cap for April 2025 will be set at £1,849, reflecting a £111 (6.4%) increase from January’s headline value. This marks the third increase in a row and the highest level since January 2024. The increase has been largely driven by higher forward wholesale costs, which rose by ~20% during the observation window.
Improving billing accuracy as potential Ofgem changes pose £200m+ risk
Suppliers may need to increase 'billed to actual' performance by 10%, if the back bill window is reduced to 6 months by Ofgem. See how to mitigate the commercial and operational risks in this article, and get tailored guidance from our interactive assessment.
Price Cap set to increase by 5% (~£80) to ~£1,815 in April
We're expecting Ofgem to set the cap at ~£1,815, an increase of £77 based on wholesale prices so far in the current observation window. Current prices also suggest the cap could stay around this level throughout the year.
Policy and Regulation
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