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Think tank calls for tougher energy regulation

A think tank is calling for tougher regulation of the energy market, to improve competition and ensure fair pricing.

IPPR believe that energy market consumers could miss out on as much as £1.9 billion in 2020 if energy companies fail to pass savings onto consumers.They argue that Ofgem’s own evidence has given no indication that the ‘Big Six’ energy companies have achieved energy savings which have helped consumers, as would be expected in a competitive market.

If the energy market made annual efficiency savings of just 2.5%, IPPR believe that they could deliver £1.9 billion in savings for consumers by 2020. This would then help to offset the cost of green policies for affected customers, as well as easing pressure on living standards.

Will Straw, IPPR Associate Director, said: “Our research adds to the growing body of evidence that competition is not working in the energy market. We are calling on the Big Six and Ofgem to demonstrate whether efficiency savings are being achieved in the energy market and whether consumers are benefitting from lower bills as a result, as we would expect if competition was working.

“We need more competition among energy companies so that households get a fairer price for their energy. Ofgem’s previous attempts to reform the market have not delivered the changes needed. UK consumers cannot afford further delays in bringing down bills.

The IPPR have also found that costs to suppliers of delivering environmental and social obligations may be £9 per customer per year less than Ofgem estimates, and the Big Six continue to overcharge existing customers to subsidise cheap offers. This is resulting in some families paying as much as £330 more than their neighbours to use the same amount of energy from the same company.

Straw added: “Some of the Big Six are failing to offer consumers tariffs that properly reflect the true cost of energy.

“Ofgem must crack down on firms found to be breaching their rules on cost reflectivity.

“Energy prices are a huge burden on UK consumers. Ofgem must act faster, bare its teeth and enforce its policies.”

This was posted in Bdaily's Members' News section by Tom Keighley .