UK Energy Retail Glossary

The UK Energy Retail sector is constantly evolving, and along with those changes comes a host of technical terminology. To help energy suppliers stay on top of these evolutions and changes, we’ve compiled a glossary of the technical terms you need to know, both now and in the future.

You can discover more glossaries on technical terms in the UK Energy Sector here:

UK Energy Assets & Infrastructure Glossary

UK Energy Renewables & Smart Grid Glossary

Market Structure & Participants

The energy market structure has undergone several major changes in the last few decades that has made the participants in the market extremely diverse. And it’s going to keep changing. Understanding the terminology around the UK Energy Retails market structure and its participants is essential for understanding the status of the market and how it’s evolving in the future.

• Distribution Network Operator: A company licensed to operate the local electricity distribution network (medium- and low-voltage cables) that takes power from the high-voltage transmission system and delivers it to homes and/or businesses.
• Distribution System Operator (DSO): An evolution of the DNO role, where the network operator actively manages the grid (for example by integrating rooftop solar and flexibility services) rather than just passively distributing power. A DSO typically still operates the same local distribution wires, but with added control and data functions.
• Energy Supplier (Licensed Supplier): A company licensed by Ofgem to buy gas and electricity from generators or wholesale markets and sell it to customers. Energy suppliers compete for customers and handle billing, but they must meet Ofgem’s licence conditions.
• Independent Gas Transporter (IGT): A company that owns and operates certain regional gas distribution networks outside the main National Grid network. In these areas, an IGT (rather than National Grid Gas Distribution) manages the local gas pipes. Ofgem limits how much IGTs can charge, but supply costs can be higher in IGT areas.
• New Entrant: A supplier new to the market without any existing customer base (as opposed to legacy suppliers that had customers from industry privatisation). New entrants bring competition and innovation but often start small.
• Third-Party Intermediary (TPI): An agent or broker (such as an energy consultant, broker, or switching website) that helps businesses procure energy contracts, compare tariffs, or obtain procurement services. TPIs aren’t suppliers themselves (they earn fees by advising clients or from suppliers) and are authorized to assist consumers in finding deals.
• Transmission System Operator (TSO): The company (like National Grid Electricity Transmission) that runs the high-voltage transmission network across the country. TSOs carry electricity from large generators to distribution networks. They ensure bulk power is balanced and transported to each region’s DNO.

Regulation & Policy

To operate in the UK Energy retail sector, energy suppliers must keep track of the various regulations and policies that impact the industry.

• Energy Company Obligation (ECO): A UK government energy efficiency scheme requiring large energy suppliers to fund home insulation and heating improvements for low-income or vulnerable households. ECO’s aim is to tackle fuel poverty and reduce carbon emissions in the existing housing stock.
• Feed-in Tariff (FiT): A (now closed) government programme that paid small-scale renewable generators (e.g. homeowners with solar panels) a fixed rate for each unit of renewable electricity they generated and exported. FiTs ran until 2019 to encourage the uptake of microgeneration.
• Ofgem (Office of Gas and Electricity Markets): The UK regulator for electricity and gas markets. Ofgem enforces licence conditions, promotes competition, and protects consumer interests in the energy sector.
• Price Cap (Default Tariff Cap): A regulatory limit on the unit prices and standing charges suppliers can charge on default and some prepayment tariffs. Ofgem sets the cap level every three months to reflect costs. The cap ensures that even customers on standard variable or default deals are protected from excessively high prices.
• Priority Services Register (PSR): A free support service managed by energy suppliers (as required by Ofgem) for customers in vulnerable situations (elderly, disabled, etc.). Being on the PSR entitles a household to extra help (for example direct meter reads or alternative supply arrangements) during emergencies.
• Renewable Energy Guarantees of Origin (REGO): Certificates issued for each megawatt-hour of electricity generated from renewable sources. REGOs are a way for suppliers to prove (on paper) that the power they supply comes from renewables. Customers who take a “green tariff” are often told their usage is matched with REGOs.
• Renewables Obligation (RO): A legacy scheme (closed to new generators in 2017) requiring electricity suppliers to submit Renewable Obligation Certificates (ROCs) to Ofgem for a portion of the power they sell. This scheme effectively compelled suppliers to support large-scale renewable generation: suppliers had to either buy ROCs from generators or pay a penalty.
• Retail Energy Code (REC): The industry code that sets out the rules for key retail operations (like switching and settlements) in Great Britain’s energy market. Introduced by Ofgem as part of the Faster Switching programme, the REC consolidates and modernises many legacy codes, creating one set of rules for suppliers, network companies, and other market participants.
• Supplier of Last Resort (SoLR): A statutory process overseen by Ofgem to protect customers when a supplier fails. If a retailer collapses, Ofgem appoints a healthy supplier to take on its customers without any interruption of supply. This avoids power cuts as the new supplier simply issues new contracts and continues the service.
• Warm Home Discount (WHD): A government scheme funded by larger suppliers that gives eligible low-income or vulnerable households a one-off discount (around £150) on their winter energy bills.

Pricing & Tariffs

You can’t make money as an energy supplier in the UK Energy Retail sector without understanding the structures around pricing and tariffs.

• Dual Fuel: A contract where a customer buys both gas and electricity from the same supplier. Suppliers often offer a “dual fuel discount” so the combined price is slightly cheaper than taking two separate suppliers.
• Economy 7/Economy 10 (Multi-rate Tariff): Time-of-use tariffs that have different unit rates for daytime and nighttime electricity use. For example, Economy 7 provides seven hours of cheaper off-peak electricity (usually overnight) and higher rates during the day. Customers with storage heaters or overnight appliances may benefit from these tariffs.
• Green Tariff: A tariff labelled “green” where the supplier matches the customer’s energy use with electricity from renewable sources (backed by REGOs). In practice, this means some or all the units sold on that tariff are matched to renewably generated units. Note that all grid supply includes some renewables, but a “100% renewable” tariff usually means all units are backed by REGOs.
• Prepayment Tariff: The price plan for customers on prepayment meters. A prepayment tariff involves paying for electricity or gas before use (topping up a meter by app, text or token). Charges on prepayment tariffs are capped by a price cap, and since 2023 they have been aligned so that prepay customers cannot be charged more than direct-debit customers.
• Standing Charge: A fixed daily cost (pence per day) on an energy bill, set by the supplier, intended to recover network and fixed supply costs. Every domestic and small business bill includes a standing charge (as well as a unit rate). This charge is included in Ofgem’s price cap and applies even if the meter reads zero.
• Standard Variable Tariff (SVT): A default tariff with no fixed term, where the price per unit and standing charge can move up or down in line with market costs. Usually, when a fixed-term contract ends (and the customer hasn’t switched), they roll onto a standard variable tariff. SVTs tend to be more expensive than promotional fixed deals.
• Unit Rate: The price (in pence) charged per kilowatt-hour (kWh) of gas or electricity used. Unit rates cover the energy itself, wholesale costs, and pass-through charges. This rate can be fixed or variable, depending on the tariff.

Customer Billing & Services

Serving customers is essential for success in UK Energy Retail. The ways of billing and serving customers have become increasingly diverse and complex, and understanding these complexities will be critical.

• Direct Debit: A payment method where a bank automatically takes a fixed or variable amount from the customer’s account on a regular schedule (usually monthly). Most suppliers encourage direct debit by offering slightly lower unit prices, since it reduces their administration costs.
• Emergency Credit: A small safety credit in a prepayment meter that kicks in when the main credit runs out. It allows the customer to continue using energy until they can top up again. Any emergency credit used is then deducted from the next top-up.
• Meter Point Administration Number (MPAN): A 21-digit unique code (often called an “S number”) identifying an electricity supply point (meter). Suppliers and networks use the MPAN to ensure energy is billed to the correct premises. It stays the same even if the customer switches supplier.
• Meter Point Reference Number (MPRN): A unique code (6–10 digits, often called an “M number”) identifying a gas supply point. Like the MPAN for electricity, the MPRN is used in the gas industry to identify each meter point. It also remains unchanged when switching suppliers or moving premises.
• Prepayment Meter (PPM): A type of gas or electricity meter where the customer pays in advance (preloads credit) to use energy. Traditional PPMs use a key or card you top up at a shop; “smart prepayment meters” also allow topping up remotely (by phone, app or text). PPM tariffs prevent customers from going into debt but require careful budgeting.
• Standard Credit: The normal billing arrangement (versus direct debit) where you receive a quarterly bill and pay afterwards. Customers on standard credit can switch supplier freely. Only outstanding debt might be recovered by the old supplier if they move. This is an informal term for pay-after-use billing.
• Switching Supplier: The process of changing from one energy supplier to another. In the UK this is now done via a centralised, meter-point-based system (e.g. the Faster Switching/REC process) and takes a few weeks at most. The old supplier remains responsible until the switch date, and the new supplier takes over seamlessly on that date.

Sustainability & ESG

ESG doesn’t just refer to us, it also refers to an energy supplier’s environmental, social, and governance responsibilities. A major factor of these responsibilities are working towards sustainability goals across the UK Energy Retail sector.

• Carbon Footprint: The total greenhouse gas emissions caused by a person, organization, product or activity, expressed as carbon dioxide equivalent. For a company, this includes direct emissions (Scope 1), indirect emissions from purchased energy (Scope 2) and other indirect emissions (Scope 3). Reducing carbon footprint is a major goal of energy efficiency and sustainability strategies.
• Corporate Power Purchase Agreement (CPPA): A long-term contract in which a business agrees to buy some or all its electricity directly from a renewable generator (such as a wind or solar farm). CPPAs help companies secure clean energy supply and finance new renewable projects. They differ from normal contracts because the energy is “sleeved” through the grid, but the corporate buyer guarantees a price for the generator.
• Energy Performance Certificate (EPC): A certificate (required for selling or renting buildings) that rates a property’s energy efficiency from A (very efficient) to G (inefficient). The EPC estimates how much it will cost to heat and power the property and gives recommendations for improvements. While EPCs apply to buildings, businesses often use similar ratings to gauge energy efficiency.
• Net Zero: The UK government’s target to balance greenhouse gas emissions with removals by 2050. Achieving net zero means that total emissions from activities (energy, transport, etc.) are equal to the amount absorbed (by forests, technology, etc.). In practice, it requires major cuts in fossil fuel use and large-scale deployment of renewables and carbon offsets.
• Scope 1 Emissions: Direct emissions of greenhouse gases from sources owned or controlled by an organisation (e.g. fuel burned in company vehicles or boilers). Scope 1 is the “direct” category in the GHG Protocol’s accounting of a company’s emissions.
• Scope 2 Emissions: Indirect emissions from the generation of purchased electricity, heat or steam consumed by the organisation. This means the emissions from power plants (or other utilities) that produce the energy a company uses. For most companies, electricity use is a major Scope 2 source.
• Scope 3 Emissions: All other indirect emissions in a company’s value chain, including both upstream and downstream (e.g. emissions from suppliers, business travel, waste, product use). Scope 3 typically accounts for the majority of an organization’s carbon footprint but is also the hardest to measure and control.

Technology & Innovation

The introduction of new technologies goes hand in hand with major changes and innovations in the UK Energy Retail sector.

• Data and Communications Company (DCC): The central company that runs the national communications network for smart meters. The DCC provides the shared infrastructure and secure data links allowing energy suppliers, network operators and other authorised parties to communicate with smart meters in homes and businesses.
• Demand Side Response (DSR): Programs or services where consumers adjust their electricity usage in response to signals (like price changes or grid needs) to help balance the power system. Examples include running appliances at off-peak times or reducing load during peak periods. DSR benefits the grid by reducing the need for extra generation during peaks and can lower customers’ bills if incentives are given.
• Half-Hourly Settlement (MHHS): Market-Wide Half-Hourly Settlement is the reform requiring all electricity consumption to be settled in 30-minute intervals. Enabled by smart meters, MHHS means that suppliers will be billed for exactly when electricity was used (half-hourly), rather than using profile averages. This provides more accurate data, supports time-of-use pricing, and helps integrate renewables.
• Smart Meter: A gas or electricity meter that automatically records and sends usage data to the energy supplier and displays real-time usage to the customer. Smart meters (SMETS1/SMETS2) enable new services such as remote meter readings, in-home displays, and time-of-use tariffs. They replace traditional meters and form the backbone of new energy services.
• Smart Prepayment Meter: A prepayment meter with smart capabilities. In addition to traditional pay-as-you-go functionality, a smart prepayment meter lets the customer top up credit remotely (by app, text or online). This removes the need to queue at shops with a card or key; credit is added instantly over the air. Like all prepayment meters, it prevents debt but requires customers to manage their top-ups.
• Virtual Power Plant (VPP): A system that aggregates many small, distributed energy resources (like home batteries, solar panels, electric vehicles, and flexible appliances) and controls them as a single resource. When coordinated, these distributed assets can provide power or flexibility to the grid much like a conventional power plant. VPPs enable end-users to participate in energy markets and help balance supply and demand in real time.