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BBC Watchdog Ann Robinson Discusses Ofgem

television remoteCar crash television at its best…

BBC Watchdog clearly saved the best until last, in the last episode of the series the host, Ann Robinson questioned

“What is the point of Ofgem?”

Judging by the performances put in by uSwitch Director Ann Robinson (no relation) and Ofgem’s Dermot Nolan, clearly the energy industry doesn’t do media slickness in the same way that it doesn’t do transparency and fairness.

We were treated to some unsteady words from both, with uSwitch’s Robinson opining that:

“I think it was dreadful that they [Ofgem] presided over a situation where we saw this massive increase in prices”

Apparently oblivious to the fact that the final price on a customer bill is not simply supplier profit margin but is used to pay for long over due network and infrastructure upgrades as well as a raft of government driven green initiatives, and the charges paid to switching services such as uSwitch themselves.

Robinson warned:

“Quite honestly we cannot afford to wait 18 months before this market works for us all”

Adding that she did not support the referral of the energy market to the Competitions and Market Authority for a full review, as it would take too long for the outcome to be delivered.

“I want Ofgem to just get on and do it and not spend loads of time talking about it”

The ‘what, who, how and when’ was conspicuously missing from the Robinson’s withering analysis.

If that unhelpful intervention was not bad enough we were then treated to a truly dreadful performance from Ofgem’s new Chief Executive Dermot Nolan.

Nolan only joined Ofgem last December having been Manager of the Mergers Division in the Irish Competition Authority and it is he who has been tasked to lead Ofgem through what is undoubtedly its most challenging period in its short history.

Nolan kicked things off with a damning indictment on the market saying in response to Robinson’s opinion:

“The persistence of the competition problems means that a full investigation by the Competitions Authority (sic) is warranted.

“It will be a very thorough review, it will look at the intrinsic structure of the industry, is the industry set up to deliver good outcomes for consumers, it really will focus on that and all the questions people have I hope will be answered”

Many observers will have wished for this sort of candor having been displayed earlier over the last 10 years of abject failure in Ofgem.

In attempting but failing to reassure that the 18-month investigation by the CMA won’t just leave the market in status quo, Nolan said:

“We won’t be off the piste, we’ll be there, we’ll be trying to protect consumers, we’ll be enforcing to improve customer service which I think is at a poor level.

“I do promise that over this 18 months we’ll be doing our very very best to protect consumers.”

Which given that is their job is the very least we could expect, with Nolan adding:

“Over that period of the next 18 months we’ll be trying our best to enforce on behalf of consumers to take active, proactive steps to say quality of service isn’t as good as it could be, it needs to be improved, and if companies don’t put consumers at the heart of things we’ll take action against them and levy fines.”

In a somewhat irrelevant departure, Nolan then referenced the long over due roll out of smart metering in the UK, not due to complete until 2020 and which will only just have started by the time the CMA investigation is due to be published in 2015. Nolan said:

“There are major changes in the energy market coming down the tracks in the next few years they’ll be smart meters coming in, we’ll have more empowered customers and I think it’s particularly important that competition is working effectively then.”

Then in the most fascinating comment of the interview, and one that follows hot on the heels of a demand from EnergyUK, Nolan committed that:

“I can tell consumers that every aspect of the customer bill is going to be audited, will be transparent and companies will have to justify them.”

In saying this Nolan has suggested that every aspect of the customer bill will be detailed whether it is the energy cost, the cost of networks, green levies, and even, and uSwitch and their fellow price comparison websites are unlikely to like this, the commission paid to them by energy suppliers for switching.

Only last week EnergyUK called for websites such as uSwitch, Which? and comparethemarket to open up about the fees they are paid by energy suppliers of anything “between £20 and £40” when a customer switches supplier through their sites.

Ofgem revealed their latest Supply Market Indicators in June and reported that the average margin of suppliers is £101 on a dual fuel contract. Customers know this and are understandably concerned; it will be interesting to see how they react to the claimed “free and impartial” services the likes of uSwitch and Which? offer when their true cost is disclosed.

Interesting times, it looks like Nolan really did save the best until last.

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