Energy Advice Line warns OFGEM new measures must be enforced

The Energy Advice Line has welcomed moves by OFGEM to crack down on misbehaviour by the Big Six suppliers, but warned that new measures were useless unless enforced. Julian Morgan, managing director of the business electric supplier comparison, switching, and advice service for energy consumers, said recent announcements by the regulator to boost competition and force suppliers to refund customers for credit balances were good news.

But he said the success of the measures would hinge on enforcement. “OFGEM appears to be finally growing some teeth and getting tough with suppliers in terms of competition and getting consumers a fairer deal. It’s long overdue,” Mr Morgan said. “However, good intentions achieve nothing on their own and the proof of the success of these measures will depend on the regulator coming down hard on suppliers who don’t comply.”

“Consumers will rightly be asking why OFGEM has taken so long to force suppliers to refund them on credit balances. They will now be expecting the regulator to follow through and impose penalties on suppliers who don’t do what they’re told. The same applies to the recent announcement of new rules to boost competition between household suppliers and provide greater clarity for bills.”

Misbehaviour may be being cracked down on, but can we really trust OFGEM to keep it up?

“OFGEM has confirmed that new regulations will require the Big Six to publish their wholesale generation prices to independent suppliers up to two years in advance, making it easier for independents to enter the market. We be watching carefully and fully expect OFGEM to impose stiff penalties on those companies who fail to ensure fair trade.” Mr Morgan’s warnings follow two separate announcements by the energy regulator.

Figures released by the Ombudsman Services last week revealed that the number of complaints from consumers battling their energy suppliers skyrocketed at the end of 2013 following price hikes.

In the first, suppliers have been told to refund more than £400 million owed to customers whose accounts were left in credit when they moved or switched suppliers. OFGEM says it’s estimates, which are likely to be conservative, are “unacceptably large”. It believes 3.5 million domestic and 300,000 business accounts are affected. In cases where the money cannot be returned, the regulator expects companies to “find ways to use this money to benefit consumers more generally” and clearly explain what they have done with it.

In the second announcement, OFGEM has announced that suppliers must publish their wholesale prices well in advance to make it easier for smaller competitors who do not produce their own energy to budget better. Suppliers will also be obliged to give consumers more information on the charges they face.

“OFGEM has faced some fierce criticism from consumer groups, politicians and even some suppliers for failing to do its job properly in the past,” Mr Morgan said. “It could well be that OFGEM is finally heeding warnings that its future depends on actually doing its job properly.”

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