UK energy industry calls for break-up of 'lost' Ofgem
By Josh White
Date: Wednesday 22 Oct 2025
(Sharecast News) - Britain's energy industry made a sweeping call for regulator Ofgem to be broken up and stripped of many of its powers on Wednesday, accusing it of excessive bureaucracy, regulatory failures and driving up costs for consumers.
In a report, industry body Energy UK - which represents more than 80 suppliers including Octopus Energy, Centrica, EDF and Drax - said Ofgem had become "too big and bureaucratic," overseeing "a dramatic increase in red tape" that has pushed up household bills and slowed investment.
The group urged the government to refocus the regulator on its core economic oversight of network infrastructure and transfer other responsibilities to separate bodies.
"There is a growing sense, in our sector and elsewhere, that the energy regulator has lost its way," said Energy UK chief executive Dhara Vyas.
"By becoming too big and bureaucratic, it has overseen a dramatic increase in red tape, reducing growth and pushing up costs for the very customers it tries to protect.
"Systemic regulatory failures have left customers on the hook for billions of extra costs and a massive increase in red tape is holding back investment at precisely the time we need it most."
The trade association's paper said Ofgem's workforce had grown by 120% over the past decade and its budget has risen by 200%, far outpacing the energy sector's workforce growth of just 8%.
It accused the regulator of failing to anticipate the 2021-2022 supplier collapse that cost billpayers around £2.5bn, while "knee-jerk" decisions since then had fuelled record household energy debt, now standing at £4.5bn.
Energy UK's proposal calls for Ofgem's consumer protection and competition roles to be transferred to the Competition and Markets Authority, with delivery of government-backed energy schemes handed to other public bodies such as the Low Carbon Contracts Company.
The shake-up, it said, would "create a streamlined and more focused organisation better equipped to carry out its main duties."
The intervention coincided with a government-commissioned review of Ofgem's role by energy secretary Ed Miliband, launched last December, with recommendations for reform expected soon.
Chancellor Rachel Reeves had also pledged to cut regulatory red tape across key industries to help spur economic growth.
Responding to the criticism, an Ofgem spokesperson was quoted as saying: "We will continue to work closely with the industry, its trade body Energy UK, and consumer groups as the energy system evolves, and the Ofgem review is an important opportunity to ensure regulation and our remit keeps pace with change."
"We're keen to work with industry to cut red tape and back investment, but firm regulation remains vital to protect consumers and maintain confidence in the sector," the added.
"No matter how you arrange the institutions, a strong, independent energy regulator will always be essential."
Energy UK said the current review was an "ideal opportunity to reset energy regulation" and warned that failure to streamline the regulator's remit would risk stifling investment just as the UK looked to decarbonise its power grid by 2030.
Reporting by Josh White for Sharecast.com.
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