Oliver Duff

i Editor's Letter: Energy watchdog asleep in the yard

Hands up if anyone can think of a more ineffectual national regulator than the power industry’s Ofgem?


Is there a more supine national regulator than the power industry’s Ofgem? Please send in your alternatives – perhaps we could award a prize. How many excess deaths each winter does the energy watchdog consider a suitable number? Is last year’s 24,000 too high/too low?

Ofgem bared its teeth at the Big Six energy firms yesterday, saying that from now on, fixed-term contracts will bring, er, fixed prices, and that they cannot automatically roll you on  to a new fixed contract when it ends. Hooray! The stable door is bolted. But is that a horse I see on the horizon...

Ofgem also announced that Scottish Power will repay its customers £8.5m after being caught mis-selling, “a clear signal to energy suppliers of the consequences of breaching licence obligations”. Some context: Scottish Power’s pre-tax profit doubled last year, to £712m. It also paid a dividend of £890m to its Spanish parent. SSE has been found similarly guilty (£10.5m fine). Investigations into npower and E.ON continue.

The Big Six energy bosses are to be dragged before Parliament. It will be good theatre, but deliver little. The  freeze promised by Ed Miliband would  not bring the reform the market needs.  Ditto the windfall tax on profits proposed by Sir John Major.

The biggest problem? Consumers need to pressure suppliers, but 60 per cent have never switched. The lack of pricing transparency (new, “simple” tariffs arrive later this year) makes it difficult to shop around, and also damages public trust – hampering the ability of ministers and power execs to persuade us of the long-term investment we must make in new energy sources. Ofgem understands this, in fairness, but is acting too late.

I don’t endorse renationalisation – the state cannot afford to update infrastructure and revolutionise supply – but Ofgem has proved itself unfit for purpose. It is the watchdog asleep in the yard.


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