Your independent energy adviser
0800 051 5770

CMA Response – Ofgem’s Former Leaders

In the latest in our series analysing the responses of key players to the CMA investigation into the UK energy market we focus on the former bosses of Ofgem, the much maligned energy regulator who are seen by many to have lost their way culminating in the CMA probe.

Although Ofgem are used to being under attack, whether it’s in these pages, from the energy suppliers themselves or consumers and politicians wondering just what it is they do, but rarely have they felt the wrath of their own.

But now that is just what has happened, in quite some style.

A raft of former Ofgem leaders has collectively accused Ofgem as being the root cause of the current market’s ills.

The collective, including Stephen Littlechild, the director-general of Offer between 1989 and 1998, Sir Callum McCarthy, head of Ofgem between 1998 and 2003 and Clare Spottiswoode, head of Ofgas between 1993 and 1998, have submitted a response to the CMA probe which shines a light on their very real concerns regarding the current regime at Ofgem.

In a damning indictment, shared by many, the group questioned the “appropriateness and effectiveness” of a number of Ofgem’s recent interventions, and encouraged the CMA to be thorough in their investigation into Ofgem’s behaviour and the impact of their decisions on the energy market.

The group also urged the CMA to ensure that Ofgem do not have undue influence on the investigation given what they see as their complicit and contributory role in the failings of the energy market.

They said:

“Because this investigation involves issues of confidence and trust in market and regulatory arrangements, it is important that the CMA’s analysis and report should be, and should be seen to be, independent of Ofgem.”

The dwindling influence of Ofgem does not stop there however.

In a rare moment of clarity from the Labour party, the opposition have committed to abolishing Ofgem if they are elected in 2015 and to replace it with a fit for purpose regulator. As more than one supplier has said however, that is all well and good as long as it isn’t the same errant failures under another name.

Back to the former leaders however, the group further highlighted a number of Ofgem’s decisions that they believe have been highly damaging to the market including the mandating that all tariffs must include a standing charge – thereby bizarrely and disproportionately punishing vulnerable, low users with unnecessarily high prices.

In addition in the business market we can point to Ofgem’s appalling decision not to outlaw punitive rollover contracts, their confused policy on deemed and out of contract rates and their utter failure to address the misuse of the objection window and in doing so stifling competition and destroying customer experience.

The litany of errors and poor decision-making is a long one.

On balance therefore the former Ofgem leaders’ contribution is to be welcomed, however it is a shame it has taken an independent probe to be the catalyst for a challenge to the dysfunctional regulator the market has been lumbered with rather than more timely interventions over the past period which could have saved an awful lot of misery for energy market customers.

Let us hope that the clarity of thought captured by Spottiswoode, Littlechild et al is not lost in political obfuscation over the coming months.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.