Ofgem confirms companies are avoiding UK energy market due to political concerns
A number of companies have chosen not to enter the UK retail energy market due to the current political environment, Ofgem confirmed today.
As part of its long-awaited assessment of energy market competition, the regulator spoke to various firms who had chosen not to tap into the sector.
“A consistent reason for not entering was the political environment surrounding the energy market and uncertainties surrounding the future course of policy,” Ofgem said.
The firms also cited factors such as the reputation of the market and poor switching processes as reasons not to enter, according to the industry watchdog.
Ofgem’s decision to refer retail energy market competition to the Competition and Markets Authority has raised fears that such a probe will deter much-needed investment into energy infrastructure.
Sam Laidlaw, the chief executive of FTSE 100-listed energy giant Centrica, warned that the review would delay investment and put the UK at “an increasing risk” of blackouts.
“There is an increasing risk. A lot can be done in terms of demand management, but actually building a new gas power station does take four years,” he told the BBC Radio 4’s Today programme.
“So that's the kind of time pressure we are up against, by adding another two years that makes it six years.”
But Ofgem’s new chief executive Dermot Nolan today defended the review and insisted it “will enhance the investment climate”.
“I think this will improve certainty and give investors the ability to engage with the process,” he told reporters this morning.
In response to Laidlaw’s comments, he said that while the referral might not necessarily be a good story for British Gas investment, it would be good for investment overall.