NEW regulations to protect consumers whose energy network supplier has hit financial difficulties come into force this week.
Network companies own and operate the gas and electricity infrastructure that delivers energy to homes and businesses.
Ring-fence arrangements for these companies have been in place since privatisation and are designed to give early warning of financial distress, mitigate the impact of any financial distress on consumers and instil good financial governance.
But now new protections, introduced by industry regulator Ofgem, include the introduction of a requirement for major network licensees to have two sufficiently independent directors on their boards.
The new measure will mitigate the risk that executive directors with other group roles, however well-intentioned, could become conflicted at times of crisis.
Ian Marlee, Ofgem’s senior partner for transmission, said: “Given the significant investment of around £30 billion that will take place over the next eight years, it is vital that consumers’ money is protected.
“That is why Ofgem is strengthening the ring-fence rules and introducing a requirement for two sufficiently independent non-executive directors on network licensee boards.”
The appointment of the independent directors is to be completed by April next year.