The regulator for energy in the UK, Ofgem have apologised for failing to sufficiently protect vulnerable customers against rising bills.
The chief executive of Ofgem, Dermot Nolan conceded that “we should have done better” and acted sooner in capping bills to protect lower income households.
In a meeting with MPs, Mr Nolan was accused of “acting like a bystander rather than a participant”.
Responding to allegations of inaction, Nolan referred to the recently introduced price cap on standard variable tariffs as a sign of positive intervention. However, he conceded that changes with regard to price controls should have been implemented sooner. Nolan also re-stated the difficulties that the regulator faced in not having the authority to introduce a cap without changing the law.
A cap on around 3 million pre-payment metres, which are generally used by lower income families, was brought into effect last April. Another million customers are set to benefit from a “safeguard tariff” set to come into play in February.
When questioned on the £1 million set aside for bonuses for Ofgem executives, Nolan stated that he would not be receiving any bonuses. Nolan, who was previously part of the Irish energy regulator, has been at the centre of an increasingly prickly discussion relating to rising energy costs since he joined Ofgem in 2014.
Various energy providers such as British gas and SSE have recently found themselves in the spotlight facing accusations of overcharging, which has damaged the UK’s standing as a frontrunner in providing fairly priced energy. Ofgem has been encouraging energy buyers to shop around for cheaper deals in the past few years in an effort to increase competition in) a market that continues to be largely dominated by the ‘big 6’.
Lack of engagement in the market on the part of energy consumers continues to be an issue, despite Ofgem and the CMA continuing to promote switching. Nolan expressed his disappointment at the fact that around 56% of households are still on standard variable tariffs, down only 12% from two years previous.
If a cap was placed on standard variable tariffs it would “significantly reduce the harm” for many energy buyers who are currently paying high rates. However, he also warned that such a cap take away motivation for many people to switch provider which would in turn result in many of the cheaper tariffs available being withdrawn
