Ofgem under fire from five former watchdogs

 

Deputy Business Editor

Former energy regulators have urged competition authorities to keep Ofgem staff away from their investigation into household bills, claiming that the watchdog itself is partly to blame for high prices.

The ex-regulators, who form some of the most senior of the first wave of energy privatisation watchdogs, believe that Ofgem may influence the 18-month investigation by the Competition and Markets Authority (CMA) into whether, and why, millions of households’ bills are too high.

One, Stephen Littlechild, said they had become increasingly concerned about the current regulator’s impact on the market, saying “when we left it, it was in very good shape”.

He and four other former regulators have published a submission to the CMA inquiry saying Ofgem, whose role is to ensure that the power giants are not overcharging customers, has made the situation worse by interfering in the market. They say that prices have shot up since Ofgem began making interventions, many of which have the inadvertent effect of adding costly new burdens to companies which are then passed on in the form of higher prices.

The signatories to the submission say that profits of the Big Six energy suppliers have risen from £233m in 2009 to £1.1bn in 2012: proof, they say, that Ofgem is failing to create a better deal for the public.

The concerned regulators are Mr Littlechild, head of the electricity regulator Offer in the late 1990s; Sir Callum McCarthy, head of Ofgem from 1998 to 2003; Clare Spottiswood, head of Ofgas from 1993 to 1998; Eileen Marshall, who has held roles at Offer, Ofgas and Ofgem; and Stephen Smith, regulator at Ofgem and the Gas and Electricity Markets Authority between 1999 and 2010. 

Mr Littlechild said at the weekend: “All I’m saying is [profits] have gone up consistently since Ofgem started intervening in the market.”

The paper takes the example of Ofgem banning companies from charging high prices to existing customers while offering cheap introductory offers to lure in new households. The change had been well-intentioned – to get companies to lower their prices for loyal customers or those less capable of willing to shop around – but it had the effect of killing off the low introductory offers. Prices ended up higher overall than they would have been if Ofgem had let the market compete freely, the submission claims.

Mr Littlechild told The Sunday Telegraph another example of bad regulation was Ofgem’s recent decision to cut the number of tariffs on offer. While making it simpler for people to work out which was the best value deal for them, it also had the effect of killing off some cheap tariffs for vulnerable customers, he said.

The signatories are concerned that Ofgem staff may be seconded to the CMA team.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Guru Careers: .NET Developer / Web Developer

£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence