Consuming Issues: Is your energy bill simple? No, but the witless regulator is...

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The Independent Online

I try to imagine the scene. Chris Huhne, the Energy and Climate Change Secretary, is in his office and in walk two men in pinstriped navy blue suits: Lord Mogg, KCMG, and Alistair Buchanan CBE, chairman and chief executive of the energy regulator Ofgem. They discuss their plans to avoid power cuts and profiteering by the big suppliers. After a cordial 20 minutes they head for the door. At which point I burst out of a cupboard and shout to Mr Huhne: "Sack them, they're useless. They run Britain's worst regulator."

Another imagining: at the Energy Retail Association, the bosses of Britain's big six suppliers view a piece on paper on which is written one word: Ofgem. They look at each other; one bursts into laughter (probably npower, the firm with ordinary prices and dismal service). Within seconds, all the chief executives are bellyaching.

Well, I suppose I should explain why Ofgem is a laughing stock. For years, it has failed to stand up to the suppliers and allowed them to overcharge the public by hundreds of millions while befuddling us with bewilderingly complex and boring bills, which one might deem a deliberate ploy to dim public interest.

But customers are interested, of course. Gas and electricity bills are at a near record level, £1,200 a year, and millions have to switch off heat to afford food. Energy is the single biggest source of public anxiety, according to a recent poll by Which? (86 per cent of people were concerned about fuel bills, ahead of tax levels (79 per cent); pensions (78 per cent) and food prices (74 per cent).

With politicians taking an increasing interest in Ofgem's slow wittedness, the organisation has begun to realise it must renew the crumbling power stations, move to a low carbon future and make the system fairer for the public.

But, as ever, it can't get it quite right. It has introduced new rules requiring suppliers to post an annual statement by December. On 1 July Ofgem boasted about this as one of three achievements that showed it was doing its job: "Unjustified tariff premiums are reduced as a result of Ofgem's supply market probe...

"Average premiums for pre-payment meters compared with direct debit have fallen by around 40 per cent... Annual statements and enhanced bills make it easier for customers to compare energy deals when switching."

Actually, Ofgem's record on all three has been a shambles, and it is still making bizarre decisions in favour of the industry giants. First, overcharging. Ofgem opposed launching an investigation into the industry two years ago, before it was forced to do so by Labour: it then found £500m of rip-offs. For five years until last year Ofgem decided not to implement an EU law, allowing suppliers to squeeze an extra £700m out of pre-payment customers.

The annual statement shows signs of further incompetence. While a good idea, it is impoverished in ambition and scope. Firms must state your tariff, energy use last year and a forecast for next year's bill. They are not obliged to state how much you spent in the past year, rendering the forward estimate somewhat meaningless. They also don't have to show average usage for a property of your type, nor list their cheapest deal, nor whether a rival has a cheaper deal. And they have retained their absurd right to notify a price rise 65 days after it has taken place.

I could go on. But, in short, Ofgem has presided over a paucity of green power, creaking generation and failed to protect consumers. Lord Mogg and Mr Buchanan are paid more than £200,000 a year each. They have been in post since 2003. They should be sacked. Really.

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