Into heat of energy battle

IT has always been suspected that Britain’s “big six” energy providers have been exploiting their market dominance with a complete lack of transparency about their charges, and this has now been belatedly proven by Ofgem, the industry regulator. In short, the companies were quick to push up prices in response to rising costs, but did not lower them by corresponding amounts when wholesale costs fell.

Yet, while the energy watchdog was congratulating itself on bringing about a watershed for consumers, and promising further changes to encourage new suppliers to enter the market and bring about great competition to help to keep future bills in check, there are serious questions to ask about Ofgem’s own competency – and whether its proposals will make a substantive difference.

If householders have been so short-changed by an overtly aggressive approach by the so-called “big six”, and that they have been deliberately keeping prices artificially high, why are they not going to be penalised for such misconduct? Allowing matters to stand, while promising other reforms, suggests – wrongly – that their procedures were acceptable. They were not, one reason why British Gas posted record profits following the coldest winter in record.

It is also bemusing that Ofgem should criticise the 180 new energy tariffs that have been introduced since 2008, leaving consumers even more confused, when it had the power to order greater transparency – particularly for those residents who are not sufficiently internet-savvy to shop around for the best deals. If Ofgem and Consumer Focus, the public watchdog, had been far more pragmatic in the first place, they would have intervened earlier and prevented this market dominance from taking place.

Streamlined energy tariffs, and greater clarity, should help households in the long-term. Such an approach, indeed, would be welcome. But such promises have been made before, and they have still left consumers facing above-inflation bill increases. And, regrettably, yesterday’s pronouncements will endure the same fate unless those bodies tasked with championing the public interest step up to the heat of battle.