On 16 September 2026, we responded to Ofgem’s consultation on exempting small suppliers from the Universal Service Obligation (USO). Our detailed response is available here.
In our cover letter, we highlight the following key points:
- We support the exemption and consider 50,000 domestic customers a responsible starting point, but any fixed threshold is necessarily an approximate proxy and should be capable of adjustment in individual cases.
- The exemption should be considered alongside the Financial Responsibility Principle, Minimum Capital Requirement and wider financial resilience obligations. A supplier should be able to activate a voluntary acquisition safeguard before growth creates a compliance or capital cliff edge.
- Existing REC and Central Switching Service controls that prevent new registrations when a Market Sanction applies could be adapted for this purpose, with distinct governance so that voluntary use is not treated as a default or compliance failure.
- Ofgem should quantify the cost of the USO and monitor the cumulative effect of exemptions. Widespread use could concentrate higher-cost and more vulnerable consumers among suppliers that remain subject to the USO, with possible implications for competition and the default tariff cap.
