Simon Read: Energy watchdog, it's time to bite rather than just bark
Simon Read is Personal Finance Editor at The Independent. He edits the Saturday Your Money section and writes the Daily Money column and Wednesday’s Midweek Money section in i newspaper. He also writes for the news and business pages of the Independent and i newspaper and is a regular money commentator on TV station London Live. He has won numerous awards including Consumer Finance Journalist of the Year.
Friday 24 January 2014
Rumours have been circulating once again this week that the energy watchdog Ofgem could be scrapped by politicians fed up with its apparent lack of action against the powerful Big Six gas and electricity suppliers. Would the end of the gas and electricity regulator be one to lament?
Let's face it, if Ofgem were on Facebook it would describe its relationship with energy firms as: "It's complicated".
The energy watchdog has long been accused of being toothless and in thrall to the multinational giants that it is supposed to police. The problem is that – despite huffing and puffing over the years – it has simply not taken tough enough action.
Rather than roaring like a fearsome lion keeping the rapacious energy companies in check, Ofgem is perceived as simply purring playfully at the gas and electricity bosses.
Its lack of any real action or crackdown on the Big Six energy companies, it seems, has allowed them to keep raking in huge profits year after year while struggling Britons face regular hikes in their bills.
It's no wonder that millions believe the energy market is broken. The giants – namely British Gas, Npower, Scottish & Southern Energy, Scottish Power, E.ON and EDF – seem to have got away with charging as much as they want to boost their often foreign-owned pockets.
Profits from each UK household climbed to £53 in 2012, when they were just £8 in 2009. Bills over the same period have soared from under £1,000 to more than £1,300.
And the watchdog has sat back and let it happen, merely blaming the companies for not playing ball by providing information quickly.
MPs made it clear they were fed up with Ofgem last year. The Energy and Climate Change Committee said the watchdog was "failing consumers ".
Labour, meanwhile, has pledged to abolish Ofgem, with its energy spokesman Caroline Flint saying: "Ofgem has shown itself to be chronically unable to enforce its own rules and keep the energy giants in check."
Here's the rub, though – we do need an independent regulator. But we desperately need a powerful one. The energy giants should be in thrall to a watchdog that bites as well as barks.
If Ofgem is scrapped, then its replacement needs stronger powers to control the energy companies. The first step should be to force them to put customers first, rather than profits.
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