The Energy Advice Line backs calls for Ofgem to be included in probe
The Energy Advice Line has backed calls for the UK’s competition authorities to investigate whether Ofgem might be to blame for the energy sector’s high profits and prices.
Five former regulators have warned the Competition and Markets Authority (CMA) that Ofgem might have weakened competition due to poor regulation imposed since 2008.
Julian Morgan, Managing Director of the Energy Advice Line, agreed that Ofgem’s behaviour needed to be included in the CMA’s 18-month probe of the energy market, even though the regulator itself had ordered the enquiry.
“We have long been concerned that Ofgem might not have done all that was necessary to regulate the energy market to ensure that competition was working effectively,” Mr Morgan said.
“Many organisations, including ours, have pointed out that the regulations covering the energy market, such as they were, were not being enforced.
“Reforms to the energy market are meaningless unless backed up by an enforcement body that has real teeth and which is prepared to stand up to suppliers that don’t uphold the spirit and the letter of those rules.
“There have been improvements in recent years, but we agree that Ofgem has many questions to answer about its role in why competition in the energy market has pretty much failed.”
In a submission to the CMA, five former energy regulators including Stephen Littlechild and Sir Callum McCarthy suggested that Ofgem might have weakened competition through poorly designed regulation
They said it was crucial that the CMA’s report “should be, and should be seen to be” independent of Ofgem, adding: “There are already some difficulties here.”
Mr Morgan agreed that the CMA’s probe should be completely independent of Ofgem, and said he shared the concerns of former regulators that Ofgem staff might be seconded to help with the enquiry.
“If the public is to have any confidence in this enquiry, and if the CMA really wants to get to the bottom of why the energy market is not as competitive as it should be, an examination of Ofgem’s role is essential,” he said.
“The regulator cannot be involved in an investigation that might include a probe into its own behaviour.
“Part of the problem with the energy market is that the public has lost confidence in the major players, including the regulator and the suppliers.
“Restoring this trust is essential if the energy market is to be transformed into the effective, competitive market it should be.
“We would like Ofgem to make clear that it will play no part in the CMA investigation and that it is prepared to be scrutinized along with suppliers and other major players.”
The warning by the former regulators come as a new report shows that rising energy bills are the number one concern for European households.
The report by Kingfisher, Europe’s largest home improvement company and owner of B&Q, found 65% of homeowners say increasing energy prices are their primary household concern.
In its survey of 17,000 people across nine countries, Kingfisher found it was more than double the 23% who were worried about mortgage or rent repayments.
The Energy Advice Line is one of the UK’s leading price comparison and switching services for business and domestic energy customers. It is also an advocate for energy market reform and has campaigned for a better deal for energy users, including calling for a ban on cold calling and changes to regulations to make it easier for all consumers to switch suppliers.
The service is completely independent and free. Consumers can quickly and simply search the market for the best available energy deals from an extensive panel of small and large energy suppliers. The service also offers a free advice service for business energy customers throughout the duration of their energy contracts.