Ofgem has hit back at claims it may be partly to blame for high prices, after a group of former regulators said it had presided over a weakening of competition in the energy market.
The energy regulator said it had introduced the "most radical set of reforms" to protect consumers in the retail energy market since competition began, after five former senior officials raised concerns about poorly designed regulation.
The rising cost of household energy has been a political flashpoint ever since Labour leader Ed Miliband pledged at last year's party conference to freeze prices and "reset" the market.
Competition authorities have since embarked on the largest-ever investigation of the UK energy market to check claims that the big six energy companies have been profiteering.
But in a submission to the Competition and Markets Authority, which is conducting the investigation, five former energy regulators expressed concern Ofgem may have unwittingly contributed to the problem of weak competition and high prices.
The submission, signed by Clare Spottiswoode, a former head of Ofgas, and Stephen Smith, who was a senior executive at Ofgem as recently as 2010, also urged the CMA to keep Ofgem staff off the investigation team to ensure impartiality.
Another signatory, Stephen Littlechild, who was head of electricity regulator Offer from 1989 to 1998, told the Sunday Telegraph he believed Ofgem had inadvertently weakened competition, citing the regulator's own figures showing the profits of the big six suppliers had risen from £233m in 2009 to £1.1bn in 2012.
"I am not taking a view as to whether profits are at the right level or not, all I'm saying is they have gone up consistently since Ofgem started intervening in the market," he said.
The five signatories, who also include Eileen Marshall – who held a series of senior roles at Offer, and Sir Callum McCarthy, a former head of Ofgem, have combined experience of regulating energy markets from 1989-2010 and describe the creation of competition in the retail energy market as "one of the great successes of energy privatisation", which has been "copied throughout the world".
After their intervention was made public on Monday, an Ofgem spokesman rejected claims that regulation had been lax.
"There certainly has been tight enough regulation. One of the chief examples of that is that when energy companies have broken the rules we have taken tough action against them. We have levied more than £100m in fines and redress on energy companies since April 2010, so compliance is something we take very seriously," he said.
They added one person was seconded to the CMA investigation and that the regulator had a role to provide sector-specific expertise. "The investigation is fully independent of Ofgem, and a completely fresh look at the market."
One year ago Ofgem introduced measures forcing energy companies to simplify energy and gas tariffs for consumers, as part of a broader shakeup that the spokesman described as "the most radical set of reforms that have ever been introduced in the retail market since competition began".
In 2008, following a previous investigation into the energy market, Ofgem banned differential pricing in a bid to stop customers of the same energy company paying much higher tariffs in different parts of the country.
Pointing to this policy, the five ex-regulators said regulation in the domestic energy market "started to take a radically different path in 2008", adding that "questions have been raised, including by some of us, as to the appropriateness and effectiveness of a number of these interventions".
The submission goes on to raise the concern that regulation could have deterred new entrants and increased costs for consumers and suppliers.
Ofgem said it would "pay close attention to the views of past energy regulators, as we do to all views and opinions that might contribute to better future performance".
The regulator added: "Referring the energy market to the CMA will help to ensure that no stone is left unturned to make sure that competition is bearing down as hard as possible on prices."
Ofgem has been fighting accusations that it is a toothless tiger, while firms such as British Gas and SSE face claims of profiteering in a market described as broken by business lobby groups.
Figures from the Department for Energy and Climate Change published by Labour earlier this year suggested little competitive pressure on the big six.
When the figures were published in March, SSE, E.ON and RWE npower held exactly the same market share in gas now as they did more than five years ago, while British Gas had seen little challenge to its market-leading position over the period.
theguardian.com
The energy regulator said it had introduced the "most radical set of reforms" to protect consumers in the retail energy market since competition began, after five former senior officials raised concerns about poorly designed regulation.
The rising cost of household energy has been a political flashpoint ever since Labour leader Ed Miliband pledged at last year's party conference to freeze prices and "reset" the market.
Competition authorities have since embarked on the largest-ever investigation of the UK energy market to check claims that the big six energy companies have been profiteering.
But in a submission to the Competition and Markets Authority, which is conducting the investigation, five former energy regulators expressed concern Ofgem may have unwittingly contributed to the problem of weak competition and high prices.
The submission, signed by Clare Spottiswoode, a former head of Ofgas, and Stephen Smith, who was a senior executive at Ofgem as recently as 2010, also urged the CMA to keep Ofgem staff off the investigation team to ensure impartiality.
Another signatory, Stephen Littlechild, who was head of electricity regulator Offer from 1989 to 1998, told the Sunday Telegraph he believed Ofgem had inadvertently weakened competition, citing the regulator's own figures showing the profits of the big six suppliers had risen from £233m in 2009 to £1.1bn in 2012.
"I am not taking a view as to whether profits are at the right level or not, all I'm saying is they have gone up consistently since Ofgem started intervening in the market," he said.
The five signatories, who also include Eileen Marshall – who held a series of senior roles at Offer, and Sir Callum McCarthy, a former head of Ofgem, have combined experience of regulating energy markets from 1989-2010 and describe the creation of competition in the retail energy market as "one of the great successes of energy privatisation", which has been "copied throughout the world".
After their intervention was made public on Monday, an Ofgem spokesman rejected claims that regulation had been lax.
"There certainly has been tight enough regulation. One of the chief examples of that is that when energy companies have broken the rules we have taken tough action against them. We have levied more than £100m in fines and redress on energy companies since April 2010, so compliance is something we take very seriously," he said.
They added one person was seconded to the CMA investigation and that the regulator had a role to provide sector-specific expertise. "The investigation is fully independent of Ofgem, and a completely fresh look at the market."
One year ago Ofgem introduced measures forcing energy companies to simplify energy and gas tariffs for consumers, as part of a broader shakeup that the spokesman described as "the most radical set of reforms that have ever been introduced in the retail market since competition began".
In 2008, following a previous investigation into the energy market, Ofgem banned differential pricing in a bid to stop customers of the same energy company paying much higher tariffs in different parts of the country.
Pointing to this policy, the five ex-regulators said regulation in the domestic energy market "started to take a radically different path in 2008", adding that "questions have been raised, including by some of us, as to the appropriateness and effectiveness of a number of these interventions".
The submission goes on to raise the concern that regulation could have deterred new entrants and increased costs for consumers and suppliers.
Ofgem said it would "pay close attention to the views of past energy regulators, as we do to all views and opinions that might contribute to better future performance".
The regulator added: "Referring the energy market to the CMA will help to ensure that no stone is left unturned to make sure that competition is bearing down as hard as possible on prices."
Ofgem has been fighting accusations that it is a toothless tiger, while firms such as British Gas and SSE face claims of profiteering in a market described as broken by business lobby groups.
Figures from the Department for Energy and Climate Change published by Labour earlier this year suggested little competitive pressure on the big six.
When the figures were published in March, SSE, E.ON and RWE npower held exactly the same market share in gas now as they did more than five years ago, while British Gas had seen little challenge to its market-leading position over the period.
theguardian.com
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