Ofgem admits energy market is not working

 
Suzie Neuwirth
OFGEM’S interim chief executive Andrew Wright yesterday said he understood why the public mistrusted energy firms and denied allegations that the regulator was “feeble” and “seriously defective”.

Wright told MPs on the energy and climate change committee that the retail market “isn’t working as well as it should do” and blamed a loss of confidence in the sector on “a legacy of years of aggressive doorstep selling, poor customer service and confusing tariffs”.

He denied that Ofgem was supportive of energy companies’ price rises or that it found a five per cent level of profit acceptable, but said the regulator could only act within its powers – turning the argument on the questioning MPs.

“If you think we should go further and should be looking at regulating these companies directly, that’s certainly a legitimate debate for politicians to have,” he said.

SSE, which made margins of between four and five per cent, said: “We believe five per cent is a reasonable margin, similar to that made by supermarkets and lower than that typically made by mobile phone companies.”

Rising wholesale costs and government green charges have been blamed by energy firms for pushing up bills. There is mounting pressure on the government to shift green levies from bills, with an announcement expected in next week’s Autumn Statement.

Wright yesterday guaranteed that network charges, which are paid to National Grid for distributing the power and which have risen sharply in recent years, would only go up in line with inflation from 2015 to 2020.