This month, the Centre for Sustainable Energy has responded to two government consultations: Smart Secure Electricity Systems (SSES) Programme: draft load control licence regulations and conditions and Implementing the load control licensing regime (both now closed).

In this blog, Dan Stone, CSE’s policy officer, explains the background to the consultations and outlines our response to the proposals that it contains.

In line with the UK’s adoption of a smarter and more flexible energy system, the government is encouraging innovations that allow consumers to be more flexible in their use of electricity. One such innovation is the ‘load controller’ – an organisation or service that monitors and manages home electricity consumption. Responding to market signals the load controller remotely alters the electrical consumption of, or export from, large electrical items like heating systems or EV batteries. In this way, consumers can set a goal – “Heat my home to 18.5 degrees by 7am” – and a flexibility service provider will turn devices on or off or up or down to achieve this output while minimising the cost to the consumer by using electricity when prices are low.

The second innovation is tariffs linked to flexibility service providers that offer the promise of lower energy costs to consumers who can shift when they use power.

Building trust

The two government consultations propose placing load controllers and flexibility service providers under Ofgem’s oversight. This new regulatory regime would – in theory – set clear responsibilities, strengthen consumer protection, ensure fair market participation, and build trust in smart electricity systems.

Sounds great. We obviously welcome the focus on building confidence in flexibility services, and the move to make load control a licensable, Ofgem-regulated activity. Consumers need to know who is responsible when things go wrong and be properly protected from poor practice, mis-selling and harm.

But there’s a weakness. The government is considering exempting energy suppliers themselves from the regulations, even though they are likely to be the biggest providers of flexibility services. 

In CSE’s view, it’s essential that these regulations apply to all providers of flexibility services, including energy suppliers that are already licensed by Ofgem. Flexibility services are not the same as traditional energy tariffs; they require more active engagement from consumers, as well as digital access and lifestyle changes. And they introduce new risks to comfort, wellbeing and financial security. As things stand, electricity suppliers’ existing licenses won’t provide sufficient consumer protection, and regulation address this. What if a household is sold a product or tariff which doesn’t suit them? Or if it doesn’t work as it’s supposed to and the household’s bills go up?

We also raise concerns that the regulations will not come into force until the end of 2027. Load control contracts already exist and are growing rapidly. Delay risks leaving customers – particularly vulnerable households – without adequate protection.

Putting fairness at the heart of flexibility

Across both consultations, CSE argues for a regulatory regime that:

• Embeds consumer protection and advocacy services from the start.
• Ensures complaints handling and redress systems are robust enough for complex flexibility services.
• Requires FSPs to actively demonstrate that their services deliver real financial benefit to consumers.
• Monitors who is participating in flexibility – so the energy transition does not become a two-tier system where only the only beneficiaries are some affluent households.