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Rubber-toothed energy regulator fails to convince

Alex Stevenson

26th November 2013

Ofgem chief Andrew Wright was grilled in the UK Parliament today by MPs whose constituents are furious with soaring energy bills and ballooning energy company profits. Andrew Stevenson was there ...

Only yesterday it emerged the Big Six have enjoyed a five-fold increase in profits per household since 2009.

If it's going to survive the current climate of public anger and political desperation over the Big Six's energy companies' price hikes, energy regulator Ofgem is going to have to do a lot better than this!

Interim chief executive Andrew Wright appeared before energy select committee MPs in Westminster this morning, offering an infuriating iron-rod rigid bureaucrats' blocking style.

What a stark contrast he made with the very human frustration of MPs. They spend their weekends talking to constituents furious at being ripped off by the energy companies - and who don't get why the official regulator lets them get away with it.

Wright faced a tough gig today. No one was in any doubt about that. Only yesterday it emerged the Big Six have enjoyed a five-fold increase in profits per household since 2009.

And his main response was to defend the energy market - as if it was functioning normally. "What we've seen is the sort of outcome you'd expect: some companies have announced low increases, some are higher," he explained blithely.

Well yes Mr Wright, you could feel the MPs seething at this bland statement of the obvious. And what are you doing to protect our constituents from unaffordable energy price hikes?

But all they got was more of the same inane flannel. "We'd expect companies to have different approaches ... some will be more successful than others, that is the nature of a free market. You'd expect them to have different costs."

And then it got worse, as he sided with the Big Six against the transition to renewable energy. Uncertainty in the energy market, he explained, resulted from the switch to a green economy - rather than from the Government's faltering and contradictory policies.

Strategic investment in wind generation, Wright went on, could result in the cost of energy transmission going up.

He could have been speaking for the energy companies themselves, echoing as he did their own recent appearance before the same committee. They used the occasion to call for an inquiry into the sector. David Cameron promptly ordered a full probe.

And he stuck firmly to the defensive. Ofgem had done a lot to make it easier for customers to switch supplier, he insisted - as if being ripped off by a different company would somehow improve the consumer experience.

"We take actions to make the market more competitive, which is our mandate," Wright bristled. "We do what we can to benefit consumers within the public policy framework that's been set for us." Nothing to do with him then!

Ian Lavery, the disbelieving Labour backbencher who has adopted a permanent air of mystified outrage throughout these inquiry sessions, couldn't help but realise he was being talked down to here.

Read my lips, Wright seems to be saying. "That's our job and we don't step outside of that because - we - don't - have - the - statutory - remit - to - do - so."

This would be a neat defence, were it not for the fact that Ofgem could have far more to prevent the "breakdown of trust" spoken of by Lib-Dem MP Sir Robert Smith. There may not be a rational reason for it, said Smith, "but the breakdown has happened and you therefore need to go that further mile to restore trust".

Smith - and the rest of the MPs on the committee - are angry with Ofgem for not having taken up more of the recommendations of accountancy firm BDO, called in two years ago to advise on how reporting of energy companies' profits could be made less opaque.

"We are going the extra mile in revisiting this question," Wright responded.

In fact what's happening is yet another consultation is taking place on the issue. It closes next month. Then Wright will spend Christmas biting his nails before pronouncing judgement some time "fairly early in the new year". Whatever that means.

It's something of a protracted U-turn which wouldn't have been necessary if Ofgem hadn't originally been bolder. That was the weakness in Wright's case today - and it showed.

Much more of this and it's more than just Wright's job that's on the line. To judge by today's performance, Ofgem itself is well past its sell-by date.

Alex Stevenson is a Parliamentary correspondent for Politics and The Ecologist.



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