Ofgem: Finance
(asked on 5th December 2016) - View Source
Question to the Department for Business, Energy and Industrial Strategy:
To ask Her Majesty’s Government what is the source of funding for Ofgem; whether it levies fees and charges; and if so, (1) under what authority, (2) against whom, and (3) what mechanisms there are for challenging the level of those fees and charges.
Ofgem’s annual budget is approved by Parliament but its main funding comes from the licence fee it is able to levy on licence holders under the Gas Act 1986 and the Electricity Act 1989.
Through its Forward Work Programme, Ofgem agrees its annual licence fee (and any amendments to this) in consultation with licence holders, and publishes its cost recovery principles on its website. The basic principle is that costs are recovered from network licensees in line with the proportion of gas or electricity customers that are directly connected to their respective networks. Ofgem also charges cost-reflective fees to consider applications for new licences or licence variations.
It also receives some funding directly from Government for the administration of environmental schemes.
There is no formal mechanism to appeal against the level of the licence fee, although Ofgem is subject to Parliamentary scrutiny and must abide by the principles for Fees, Charges and Levies set out in Managing Public Money: