MPs: ‘Ofgem must take stronger action’

Energy regulator Ofgem must get “tougher” on energy companies and take stronger action to ensure that homeowners get a fair deal, a committee of MPs has said.

EnergyPic
Government says energy regulator “must get its act together” to ensure homeowners get a fair deal.

The Energy and Climate Change select committee has accused Ofgem of being “hesitant” to investigate anti-competitive behaviour and urged the industry watchdog to adopt a more proactive approach.

MPs said that the six largest energy suppliers took advantage of homeowners unwillingness to switch tarriffs, making it difficult for new players to enter the market.

Tim Yeo, chair of the committee, says: “We find it unsatisfactory that Ofgem should be so hesitant about launching preliminary investigations into potentially anti-competitive behaviour. We understand that Ofgem plans to reduce barriers to competition, but we believe that a more proactive approach should be adopted.

“It should require greater transparency around wholesale prices, trading and the link between wholesale prices and supply prices. We intend to explore ways in which this might be done in our forthcoming inquiry on prices, profits and poverty.”

It suggests that Ofgem publish an annual report aimed specifically at consumers and media, outlining the profits being made by energy companies to provide greater transparency.

The industry watchdog was also criticised for the “snail-like pace of its progress on a market review expected to provide suggestions for greater transparency across the sector. Both Ofgem and Prime Minister David Cameron have told suppliers to simplify bills and the committee questioned why the regulator had been slow to launch a full investigation.

Yeo says: “Whether or not these measures will improve the situation for consumers remains to be seen, but it is crucial that if they do not, the government and Ofgem are prepared to take stronger action to ensure that consumers get a fair deal from energy providers.

“A recurring theme throughout this inquiry has been the lack of transparency about where the money that people pay for their energy goes.”

Ofgem says it shares some of the concerns raised and will analyse the report before responding to the committee.

An Ofgem spokesman adds: “We do share the committee’s concern about transparency, which is why we publish a weekly report setting out wholesale and retail prices.

“We also share the committee’s concerns about competition in the energy market, which is why we are progressing with the most far-reaching reforms since competition began, to make it simpler, clearer and fairer for consumers.”

The report comes just weeks after industry experts expressed concerns that the government’s plans to ensure all households are on the cheapest energy bills would limit brand building opportunities.

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