Ofgem seeks partner to administer voluntary redress funds

Ofgem has today published a contract notice for the procurement of an independent organisation to manage and allocate voluntary redress funds, which are paid to charitable bodies by energy companies in lieu of a penalty following wrong-doing or a failure which impacts consumers negatively.

The expert service provider will be responsible for:

  • Financial management of voluntary redress monies, including receiving the funding from energy companies and awarding grants to charitable recipients;
  • Identifying potential charitable recipients, which could include local authorities acting in partnership with a charity, to be allocated redress funding whose projects would achieve the Authority’s objectives;
  • Using knowledge of the British energy sector and the needs of energy consumers – including the needs of vulnerable consumers and those of future consumers – to inform decisions on the allocation of funding;
  • Monitoring the projects and evaluating the use of the funds and taking action to ensure that the projects are delivering real benefits to consumers; and
  • Providing Ofgem with regular reports on the performance against the objectives.

The allocation decisions of the Service Provider are to be made so that the following principles are met:

  • a proportion of the funding is used to support projects that deliver benefits to the types of consumers that were negatively impacted by the breach(es) that have occurred;
  • a proportion supports projects in line with Ofgem policy priorities, such as our current wish to support energy consumers in vulnerable circumstances; and
  • a smaller share of the redress money is used to fund charitable projects that implement innovative products or services that are market ready but are not yet accessible to energy consumers and which have realistic prospects of delivering direct benefits to consumers.

Interested parties must complete and submit a questionnaire, published today, by 15 March 2017. Ofgem will invite the highest scoring parties from this stage to submit a full tender submission. Ofgem will then award the contract to one of these parties. If you are interested in applying to provide this service, see the contract notice.

The regulator made the decision to engage an expert third party organisation last year. It aims to announce our chosen supplier in summer 2017.

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